CORN HIGHLIGHT

• Despite overall bearish WASDE report numbers, strength in the wheat market supported front month corn futures to end the week. Bull spreading was noted, buying old crop and selling new, helping limit selling pressure in the corn market overall.
• USDA estimated Old Crop corn carryout at 1.417 billion bushels, using a 75 mb cut in export demand to increase the supply picture. This total was 51 mb above trade expectations.
• The most negative side of the USDA WASDE report was 23/24 carryout projections of 2.222. The USDA used a baseline yield of 181.5 bushels/acre and 92 million planted acres of corn to estimate production at 15.265 billion bushels, up 1.54 billion bushels from last year.
• With the USDA report passed, the market will shift its focus back to the weather, which appears mostly favorable for planting pace while still providing adequate moisture to allow this year’s crop to have a strong start.
• USDA raised projected Brazilian corn crop to 130 MMT, up 5MMT from last month as acreage has increased, and the crop has been supported by favorable weather overall. The record Brazilian production will be direct competition to U.S. export business well into the summer.

SOYBEAN HIGHLIGHTS:

• Soybeans closed sharply lower with new crop leading the way down after a bearish WASDE report. Soybean meal closed slightly higher, while soybean oil moved lower with crude oil.
• Brazilian soybean production estimates were raised to 155 mmt, which was above trade guesses and above April’s WASDE by 1 mmt. Surprisingly, Argentinian production was left unchanged at 37 mmt despite many private analysts estimating it much lower near 35 mmt or below.
• The USDA estimated the 23/24 soybean ending stocks at 335 mb which was higher than expected, and production was pegged at a record high 4.51 bb. Ending stocks for 22/23 were 215 mb, above the last estimate of 210 mb.
• Argentina has imported a record 539,000 mt of Brazilian soybean meal to offset its own lost supplies, but analysts have reported that Argentina’s capacity to import meal is limited to just 8 mmt per year. This has been supportive for US soybean meal prices as the US may be able to export more.

WHEAT HIGHLIGHTS:

• The USDA projected 23/24 US all wheat production at 1.659 bb (vs the average trade guess of 1.782 bb).
• The USDA pegged US wheat 22/23 ending stocks at 598 mb, compared with an expectation of 603 mb. For 23/24 carryout is estimated at 556 mb vs the average trade guess of 602 mb.
• The Black Sea grain deal negotiations are said to have not gone well, with the talks ending yesterday with no resolution.
• July KC wheat rallied sharply to end the week after the USDA estimated HRW production at 514 mb vs an expectation of 591 mb (and 531 mb last year).

DAIRY HIGHLIGHTS:

• Despite some mid week optimism, second month Class III and IV contracts finished lower this week.
• A three-week trend of higher prices in the Class IV second month contract was broken with the move lower, down 14c on the week.
• The close lower for the week on the second month Class III contract marks the third straight week lower, down $1.35 for the June contract during that time.
• None of the spot products finished in the green this week; cheese and butter were big movers, losing 6c and 4c per pound, respectively.

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Author

John Heinberg