CORN HIGHLIGHT

• Extended weather forecasts are signaling a potential pattern change as the current ridge over the Corn Belt will be replaced by a more active weather pattern. This triggered profit taking and technical selling after last week’s rally, as corn futures traded lower to start the week.
• Corn demand remains a concern as weekly export inspections were marked at 52 mb, at the top of expectations, but still down 32% from last year and behind the pace needed to reach the USDA export target.
• The Brazilian corn harvest is starting to begin, and AgRural raised their projection for the Brazil second crop corn to 127.4 MMT up from 125.1 MMT for their April projection.
• For the first time since 2013, Chicago wheat prices are trading below corn futures prices on the front month as July Chicago Wheat (SRW) closed at $5.91 versus July corn at $5.94. Cheaper wheat may lead to additional demand concerns with the substitution of wheat into feed rations versus corn.
• The USDA is scheduled to release the first corn crop ratings on Tuesday afternoon. Expectations are for the crop to be 71% Good/Excellent, in line with the 5-year average. Last year’s first initial crop rating was 73% Good/Excellent. Corn planting is expected to be 92% complete, up from 81% last week.

SOYBEAN HIGHLIGHTS:

• Soybeans closed sharply lower, led down by a decline in soybean oil by over 5% and declines in soybean meal and crude oil as well. A change in the weather forecast for June put pressure on the markets today.
• Last week, the 10-day forecast was calling for warm and dry weather as planting wraps up, but over the weekend forecasts were updated to show cooler weather with more precipitation beginning in the middle of June. For now, it appears as though the market will be trading weather.
• Export inspections for soybeans came in at 9 mb which was in line with expectations, but still below the 17mb needed each week to reach the USDA’s estimate.
• Soybeans in both Brazil and China declined today, partially because of Brazil’s crop size and partially due to slowing demand in China. On the Dalian exchange, soybeans lost 1.8% and are trading at the equivalent of $14.80 per bushel.
• Soybean planting progress will likely show a large jump from last week’s 66% completion, and typically soybeans can handle early dry conditions better than corn can. So, the recent dryness is of less concern since it may not affect yields.

WHEAT HIGHLIGHTS:

• Wheat’s lower trade today is likely the result of a risk off session caused by improving chances for rain throughout the Midwest, spillover pressure from corn and beans, as well as concern about lower global demand for wheat due to financial and economic issues.
• Wheat inspections were decent at 14.0 mb, bringing the total 22/23 inspections to 719 mb.
• Despite Russian attacks over the weekend in the port of Odessa, one of the ports supposedly protected in the Black Sea grain deal, and reports of Ukrainian drones hitting Moscow, US wheat futures posted sharp losses in today’s session.
• Australia is starting to get some rain, although the El Nino weather pattern is growing, which generally means less rain for that region of the world. This may have contributed to today’s weakness as some drought concerns were reduced.
• Higher temperatures last week in North Dakota are likely to be reflected in an increase in spring wheat planting on this afternoon’s Crop Progress report.
• Friday’s Commitments of Traders report showed, as of May 23rd, funds holding 121,053 short contracts of Chicago wheat, which is equivalent to 605 million bushels.

DAIRY HIGHLIGHTS:

• Cheese selling continued as cheddar blocks fell to a three-year low today, bringing the block/barrel average to $1.4625/lb.
• This had nearby Class III contracts on the defensive with second month June futures down 32 cents to $15.56 and July futures 26 cents lower to $16.32.
• Class IV action was mixed with May and July futures finishing higher, while every other 2023 contract was 1 to 17 cents lower.
• Spot butter remains in good shape as it started the week unchanged at $2.43/lb; spot powder remains near two-year lows.
• The dollar index has moved back over 104.00 in recent weeks, hurting US competitiveness for dairy product exports.

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Author

Amanda Brill