CORN HIGHLIGHTS:

• Corn futures trended higher after Wednesday’s USDA report to finish with modest gains. The corn market has been acting independently the past couple of sessions despite moves in both the soybean and wheat markets. The lack of any real news from the USDA allowed the corn market to see some buying strength.
• The USDA report saw little changes in the corn balance sheets for the US or globally. The USDA left the US supply/demand tables unchanged from the month of May. In South American productions, the USDA left both Brazil and Argentina production unchanged from last month.
• With the report now past the market, the focus turns back to the weather. Weather models are predicting above normal temperatures to move into the Corn Belt into late June and early July. The key will be precipitation, which early indications are for the rainfall to stay active into next week with the increased temps. Conditions are likely favorable for crop growth overall.
• Corn demand has remained firm at the front end of the market. The USDA will release the next round of export sales on Thursday morning. Expectations for new crop sales to range from 700,000 – 1.2 mmt for old crop, and up to 200,000 mt for new.  Last week old crop sales totaled 1.18 mmt of corn.
• Weekly ethanol production dropped to 1.023 million barrels/day last week, down nearly 50 million barrels/day from last week, but up less than 1% from last year. A total of 102.5 mb of corn was used in the production process last week, which slipped below the pace needed to reach USDA targets.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower after a relatively neutral WASDE report which held few changes. The majority of losses were in the deferred months as trade anticipates a large crop. July soybeans were only down by 3/4 of a cent. Soybean meal was mixed with slight gains in the front month and lower prices in the deferred contracts, and soybean oil was higher.
• The highlights of today’s WASDE report were that the USDA increased US soybean ending stocks for 24/25 to 455 mb from 445 mb last month which was expected. The increase in stocks came from a drop in expected crush demand. Brazilian production was lowered slightly by 1 mmt to 153 mmt but was still above average range trade estimates. Argentinian production was unchanged at 50 mmt.
• With the June WASDE report now out of the way, trade will focus on weather going forward. The forecast is mainly dry, which is needed in many areas that have been getting significant amounts of rain. The La Nina weather pattern is expected to affect the US this summer which could cause heat and dryness to continue into July and August which would be supportive to prices if verified.
• China purchased an additional 106,000 mt (3.9 mb) of soybeans in a flash sale released by the USDA.  This was the third sale in the past four sessions of soybeans to China, and the best June streak of purchases by China dating back to 2019.

WHEAT HIGHLIGHTS:

• Wheat closed with double-digit losses in all three US futures classes today. A sharply lower close for Matif wheat, a lack of fresh friendly news, and no major surprises in the monthly WASDE report were all contributing factors in today’s weakness.
• Today’s USDA report was about as neutral as can be, from a big picture perspective. The wheat data, in particular, had a slightly negative bias with average yield increased to 49.4 bpa, compared to 48.9 bpa last month. This led to a 17 mb production estimate increase from 1.858 bb in the May report, to 1.875 bb today. Of that total, 1.295 bb is winter wheat, compared to an estimate of 1.278 bb last month.
• US 23/24 wheat carryout was pegged today at 688 mb, unchanged from May, and less than the average trade guess of 690 mb. For 24/25, carryout came in at 758 mb, compared with 766 mb in May, and 782 mb expected. Global 23/24 wheat ending stocks saw an increase from last month of 1.8 mmt to 259.6 mmt, while 24/25 decreased by 1.3 mmt to 252.3 mmt.
• Today the USDA did cut their estimate of Russian wheat production by 5 mmt to 83 mmt. From a glass half full viewpoint this is supportive. But with most other estimates around 80 mmt, the cut was perhaps not as much as some were anticipating.
• CPI data this morning was friendly, at an unchanged level month over month. This was better than expected, as the trade was looking for a 0.1% increase. This sent the US Dollar Index tumbling, which may provide more long-term support to wheat if the trend remains lower. But for the time being, harvest pressure may limit upside potential.

DAIRY HIGHLIGHTS:

• The Class IV milk trade was under pressure on Wednesday, with contracts falling as many as 42c lower.
• Weakness in both the butter and powder futures contracts added resistance to Class IV.
• The spot cheese block/barrel average was bid higher for the third day in a row. This puts the b/b average at $1.97375/lb.
• Class III milk futures added 5-7c in the nearby months with July settling at $20.60 while August closed at $21.07.
• The Supply and Demand report said strong demand for dairy products is expected to carry into 2025 and forecasts are raised for butter, cheese, and whey.

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Author

John Heinberg