- Corn futures turned higher off early session lows as money flowed into the market, supported by “risk on” trade across the broader markets, and weather models turning drier for the eastern Corn Belt next week.
- The CBOE Volatility Index (VIX), which measures fear in the markets, pushed to its lowest level in over 23 months, allowing strong money flow into both equity and commodity markets.
- Demand concerns are still a major factor in the corn market. Weekly exports sales for corn were disappointing with old crop sales at only 7.4 mb and new crops sales 12.3 mb last week. Both were on the lower end of expectations as the U.S. struggles against foreign export competition.
- July corn futures had a strong close over the 50-day moving average for the first time since April 19th, and the strong price action could lead to additional buying support on Sunday night’s open.
- Next week, the corn market will likely stay volatile focusing on daily weather forecasts and preparing for the June WASDE report to be released on Friday, June 9.
- Soybeans ended the day higher thanks to strong gains from soybean oil, while soybean meal closed lower. July soybeans gained 14-¾ cents on the week, while Nov beans lost 6 cents. The stock market posted significant gains, which helped support commodities.
- The debt ceiling bill being passed by both the House and Senate calmed many traders’ fears and resulted in a 600-point gain in the Dow and spurred buying in the commodity market. The debt ceiling deal will be good until January 1, 2025.
- The Midwest has been dealing with dryness and has only received very sparse scattered showers. The dryness has helped support prices, but good rains are forecast for the second half of June. If those promised rains don’t fall, futures could continue higher.
- Export sales for the week ending May 25 showed an increase of 4.5 mb for soybeans in 22/23, which was up 7% from the previous week. Sales for 23/24 were 11.1 mb and export shipments of 8.5 mb and were below the 13.3 mb needed each week to achieve the USDA’s estimates.
- The USDA reported net cancellations of 7.7 mb of wheat export sales for 22/23, but an increase of 17.1 mb for 23/24.
- Wheat traded both sides of neutral today, but ended with a positive close. Spillover from higher corn and soybeans was likely a contributing factor.
- A combination of weather and higher outside markets also lent support to the grain markets today. As of writing, the Dow is up over 700 points and crude oil is up about $1.50 per barrel, coming after the debt ceiling deal was passed by congress and strong jobs data this morning.
- Paris milling wheat was also higher today, as it is being reported that Russia is again refusing to register Ukrainian grain vessels. Tensions between the two warring nations are high, despite the recent extension of the export deal.
- Managed funds are said to be short 605 mb of SRW wheat – that is more than the USDA’s estimate of 2023 production (406 mb). This could lead to a short covering rally if there is a catalyst to light the fuse.
- The rains have subsided in China’s wheat growing regions. However, the damage may already be done. Crop damage is likely, and at a minimum, there will be quality downgrades.
- Milk futures continue down the path of least resistance lower with Class III leading the charge. July through October Class III contracts all fell greater than 30 cents on the day while Class IV was mixed with July and October unchanged and August and September down 10 and 9 cents, respectively.
- The spot markets offered no help but explain why Class IV has not fallen as quickly as Class III with butter up slightly and powder unchanged while both cheese and whey fell to lower prices.
- Regional cheese reports show hefty milk supplies despite a declining herd from March to April and minimal production growth in 2023 compared to last year.
- Next week is quiet on fundamentals besides a Global Dairy Trade event on Tuesday which will look to end a streak of two lower auctions from May.
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