CORN HIGHLIGHTS:
- The corn market finished with modest gains on Thursday as the row crops, corn and soybeans, saw good buying strength. The lack of new bearish news on Wednesday’s USDA report, and some potential weather issues triggered a short covering rally.
- Wednesday’s USDA report brought little change from the May report. Speculative positions that were making bearish beats for the report may have lifted positions during the trade on Thursday.
- China’s major corn producing regions are turning dry according to news sources. China is early in the calendar year for their corn crop, but the market may be building some weather premium in anticipation of more potential corn export business. China is the world’s second largest corn producer after the United States.
- Weekly corn export sales for corn have stayed supportive of price. Last week, U.S. exporters posted new sales of 1.056 MMT (41.6 mb) of old crop sales and 69,500 MT (2.7 mb) of new crop sales. This was within market expectations, but firm for this time of year as U.S. corn stays competitive on the export market. Total corn sales commitments have reached 2.060 bb in 2023-24, up 36% from a year ago.
- 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 in the western and northern Corn Belt, but the eastern Corn Belt is looking to turn drier.
SOYBEAN HIGHLIGHTS:
- Soybeans ended the day higher following yesterday’s neutral to slightly bearish WASDE report. Trade is likely reacting to good export sales this morning along with a flash sale reported to unknown destinations. The hot and dry forecast for June likely contributed to today’s gains as well, but many areas will welcome the dry conditions after so much rain. Both soybean meal and oil closed higher today, but meal led the way up.
- Today’s export sales report showed an increase of 13.9 mb of soybean export sales for 23/24 and an increase of 0.1 mb for 24/25, and China was the number one buyer. This was up 99% from the previous week and 42% from the prior 4-week average. Last week’s export shipments of 7.9 mb were below the 13.2 mb needed each week to meet the USDA’s export estimates. Primary destinations for shipments were to the Netherlands, Mexico, and Indonesia.
- This morning, Private exporters reported sales of 120,000 metric tons of soybeans for delivery to unknown destinations during the 2023/2024 marketing year.
- In yesterday’s WASDE report, trade was looking for a decrease in Brazilian production and got one, although it was very small. Brazilian soybean production was only lowered by 1 mmt to 153 mmt. This morning, CONAB released its estimate for soybean production at 147.3 mmt. It is interesting that there is still a nearly 6 mmt discrepancy between the USDA and CONAB even though the crop is almost completely harvested.
WHEAT HIGHLIGHTS:
- After showing some signs of recovery earlier today, wheat ultimately closed lower across the board, with the exception of July, September, and December Chicago. US wheat may have been a follower of Matif wheat futures; the front month September contract broke 50 day moving average support today for the first time since late March. In addition, the US Dollar Index had a strong recovery that pressured wheat, as it nearly gained back the loss from yesterday.
- Scattered showers in parts of southern Russia and eastern Ukraine may bring relief to drought-stricken areas, and this may also account for some of today’s weakness as well. However, this does not change the fact that the USDA reduced their estimate of Russian wheat production by 5 mmt on yesterday’s report.
- The USDA reported an increase of 8.2 mb of wheat export sales for 24/25 and an increase of 0.8 mb for 25/26. Shipments last week at 9.6 mb fell below the 15.4 mb pace needed per week to reach the 24/25 export goal of 800 mb. Commitments for 24/25 now have reached 178 mb which is up 22% from a year ago.
- Strategie Grains lowered their estimate of the European Union soft wheat crop to 121.8 mmt, which was a reduction of 1.7 mmt from a month ago. France is expected to see the largest decline. Furthermore, they lowered their projection of the Russian wheat crop from 89.9 mmt down to a range of 78-80 mmt, a quite significant drop.
- According to the USDA as of June 11, an estimated 16% of US winter wheat acres are in drought. This is a decline from 21% a week ago. Additionally, only 3% of the spring wheat area is said to be in drought, which is unchanged from the week prior.
- From a technical standpoint, all three US classes of wheat have become very oversold after the recent slide in price. This could indicate that a bottom is near. However, it is important to keep in mind that it is possible for a commodity to become and remain oversold for quite some time during a strong downtrend.
DAIRY HIGHLIGHTS:
- The spot cheese block/barrel average has closed higher four days in a row and has now once again pushed through the $2.00/lb level.
- The cheese bidding is bringing optimism back into the Class III trade, as contracts rallied as many as 49c higher with a $21.09 close for July.
- Class IV has taken a step back, and are starting to lose ground to Class III. A lower butter and powder trade are pressuring.
- Cheese futures had a strong session, nearly closing limit higher. July cheese added 6c to $2.0980/lb.
- At Thursday’s close, each contract July through September 2024 Class III milk closed over the $21.00 mark.
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