CORN HIGHLIGHTS:

• Strong buying entered the corn market to start the week as spill over strength from the soybean market triggered a short covering rally in an oversold market. Despite the strength, December corn remains in the sideways range of 405 – 415 that it has been trading in since July 8.
• On Friday’s Commitment of Traders report, managed hedge funds slightly reduced their record net short position in corn. Last week funds were net buyers of 10,587 corn contracts, but still hold a sizeable net short position of 343,396 contracts.
• The USDA will release the next round of crop ratings on Monday afternoon. Expectations are for corn ratings to remain steady to slightly higher over last week’s numbers. Last week, corn was rated 65% good/excellent, which was trending 11% higher than last year.
• The key second crop (safrinha) corn harvest in Brazil is progressing quickly. Brazil Ag analyst, AgRural, stated that 83% of the second crop corn was harvested, up from 74% last week. Last year, only 47% of the crop was harvested in this time window. Brazil’s second crop corn is approximately 75% of their  corn production
• Weather forecasts going into the end of July are turning less friendly for crop development going into the first part of August as temperatures are trending warmer than average, and moisture in normal to below normal. While most of the corn crop is in good condition, weather will still play a key role in finishing the crop into harvest.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day sharply higher, quickly erasing last week’s losses. While funds hold a record net short position in soybeans, the forecasts predicting short-term dry weather likely triggered today’s short covering rally. Both soybean meal and oil ended the day higher as well.
• Later today, the USDA will release its Crop Progress report and expectations are that good to excellent ratings will increase for soybeans by 1% from last week. The upcoming hot and dry weather could pose a challenge later this week, but conditions have been relatively good so far this season.
• Both soybean meal and oil closed higher today with meal leading the way up, with the strong close in both products adding to already impressive crush margins. These margins have improved significantly which has spurred domestic demand as processors scoop up cheap cash soybeans. This has also propped up nearby soybean prices relative to new crop months.
• According to Friday’s CFTC report, funds added to their short position in soybeans as of July 16. They sold 13,145 contracts, increasing their net short position to a record 185,750 contracts.

WHEAT HIGHLIGHTS:

• After a two-sided trade, all three US wheat classes closed higher, led by Minneapolis futures; this was likely a result of spring wheat development concerns from dryness in parts of Canada and the US northern Plains. Corn and soybeans were sharply higher today as well, offering support to wheat. However, this may be more of a technical bounce from oversold conditions, wherein funds are covering some of their short positions. Additional support came from continued talk of quality concerns for the French and German wheat crops.
• Friday’s CFTC report indicated that as of July 16, managed funds increased their short position in Chicago wheat to 75,886 contracts from 69,137 contracts the previous week. Additionally, for the same time period, they added to their short position in Kansas City wheat, going from 40,811 to 43,896 contracts. Their total short position in wheat, when you add in Minneapolis futures, is close to 145,000 contracts, their largest wheat short position in three months.
• Weekly wheat inspections of 8.7 mb brought total 24/25 inspections to 95 mb. This is up 20% versus last year, and wheat inspections are running ahead of the pace needed to reach the USDA’s 825 mb 24/25 export projection.
• According to IKAR, Russian wheat export values ended last week at $219 per mt, unchanged from the previous week. Additionally, SovEcon said that Russia shipped 710,000 mt of grain last week, compared with 600,000 mt the week prior. Of that total, 660,000 mt was said to be wheat.
• The Wheat Quality Council kicked off their hard red spring wheat tour today in Fargo, North Dakota. With the ND crop rated at 82% good to excellent as of July 15, they are expected to find good quality wheat. While the majority of the tour is within North Dakota, there will be some travel through northern South Dakota and western Minnesota.

DAIRY HIGHLIGHTS:

• Class III milk futures saw double digit gains in the August through December contracts to start the week. The second month contract finished at $20.14.
• Spot cheese had a nice 1.125 cent jump today to finish at $1.90/lb, while whey hit a new 5-month high at $0.5250/lb.
• Class IV futures were mixed with September and October slightly higher while December fell a penny. The second month contract remains at $21.40.
• Both butter and powder started the week unchanged with no loads traded.

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Author

John Heinberg