CORN HIGHLIGHTS:

• Profit taking on extremely overbought conditions and a sharply lower soybean market weighed down corn futures as the July contract led the New Crop contracts lower as traders moved long July positions to the September contract.
• The European weather model shows 10 days of mostly dry weather for the Midwest, primarily in Il, E IA, IN, and parts of MO and S WI. Whereas the US model has rain in 8-10 day forecast but some think it may be overdone.
• The latest US Drought Monitor shows deepening drought in the Dakotas and much of the north and central Midwest. Where conditions haven’t been this poor since 1988.
• Between June and July in 2012 the USDA lowered corn yield by 20 bu. and if it were to happen this year, there are concerns that it would put yield below 170 and take nearly 1 billion bushels from this year’s production.
• Last week’s ethanol production numbers were released today and showed an increase to 1.052k barrels/day up from 1.018k barrels/day the week prior. While the increase in production is positive, the pace still falls below what is needed to reach the USDA’s estimate.
• Brazil’s safrinha corn harvest is well underway and continues to weigh on the country’s domestic basis, potentially further slowing US exports with cheaper export prices than US offers.

SOYBEAN HIGHLIGHTS:

• Soybeans closed sharply lower, led down by new crop as soybean meal lost over 3.5% in the August contract, while soybean oil recovered at the end of the day for a positive close.
• The entire soy complex was volatile today after soybean oil closed limit down yesterday causing all three soy products to have expanded limits today. Soybean oil was driven lower by the EPA announcement regarding biofuel mandates.
• Forecasts for the Corn Belt are still very dry for the next seven days, but Iowa is now expected to receive slightly more rain while Illinois and Indiana are expected to remain dry.
• While the EPA’s targets for advanced biofuels were below industry hopes, they do allow some growth of renewable diesel production, but not as much as expansion plans already proposed.

WHEAT HIGHLIGHTS:

• After trading on both sides of unchanged, all three US wheat classes closed higher with the exception of July K.C. wheat.
• Private estimates of India’s wheat crop are 10% below their government’s estimate, and if this is correct, it could mean that India will need to import wheat.
• As a reminder, July grain option expiration is tomorrow, and first notice date for July grain futures next Friday. With the funds still believed to be net short wheat, this could lead to some spread trading if they roll out of July and into deferred contracts.
• The heavy rain in China’s wheat growing region is still expected to result in quality downgrades, and more wheat to be used for feed.
• Sov Econ reduced their Russian wheat crop projection to 86.8 mmt vs 88.0 mmt previously because of hot and dry weather.
• Because of the shortened week, export sales data is delayed until tomorrow, but is likely to continue to show disappointing numbers for wheat, since Russia continues to dominate on the export front.

DAIRY HIGHLIGHTS:

• Despite small gains in spot cheese, nearby Class III futures dropped hard today with the July contract down 49 cents to $15.29.
• This is a new low close for the contract and comes after it gained 47 cents in Tuesday and Wednesday’s trade.
• The Class IV market saw only the front month June contract close green today while all others were unchanged.
• The second month Class IV contract has spent the better part of the last month at more than a $2.00 premium to the second month Class III contract.
• Spot butter is entering Friday up 1.50 cents for the week while spot powder is lower by the same amount.

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Author

Amanda Brill