CORN HIGHLIGHTS:

• Even with a surge in overnight prices after the most recent attack by Russia on Ukraine’s export infrastructure, corn futures failed to hold gains, reversing to close lower on the session as weather forecasts and demand concerns drive the market sentiment.
• December corn futures had a 26-cent trading range on the session, closing just above the psychological $5.00 level, but at the bottom of the trading range. The weak technical picture will likely keep selling pressure in the market in the near term.
• The weather forecasts are non-threatening as August weather is expected to stay cooler than normal with average to above average rainfall. This forecast will help fill the recently pollinated corn crop.
• Demand will be the focus on Thursday morning with the release of USDA’s weekly export sales report. Expectations are for corn sales to range from 150,000MT-500,000 MT for old crop, and 200,000-700,000 MT for new crop for last week. Export demand is still well behind last year’s levels at this time.
• Outside markets added to selling pressure as the credit rating agency, Fitch, lowered the US credit rating from AAA to AA+, sending a “risk-off” trade across equity and commodity markets on Wednesday.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower after trading slightly higher overnight, while soybean meal ended lower and soybean oil was bull spread, with front months higher and deferred contracts lower despite a sharp decline in crude oil.
• Soybeans have lost over $1.10 in the past 7 days as weather shifted from hot and dry to a forecast of cool and wet, with temperatures expected to be in the low 80’s and above normal rains for the entire Corn Belt and northwestern Plains.
• Due to the upcoming El Nino pattern, northern Brazil may experience drier than normal conditions next year, which could impact their total production and support prices, but the same pattern may show Argentina receiving more rains.
• The current USDA yield estimate for the soy crop is 52.0 bpa, and while that number seemed far away a few weeks ago, it may be achievable if these August forecasts hold up. Illinois, Minnesota, North Dakota, and Michigan all had some of the worst good to excellent ratings last week, but all four states are forecast to get higher than normal rains over the next two weeks.

WHEAT HIGHLIGHTS:

• Wheat was higher overnight after a new round of Russian attacks hit Danube River terminals in Ukraine. However, this was not enough to sustain a rally; all three US wheat futures classes closed lower in tandem with Paris milling wheat.
• Slovakia is planning to increase the capacity of railway transport for Ukrainian grain. Funding was reportedly approved for two projects to increase the amount that can be transported through these lanes.
• The US credit rating was lowered from AAA to AA+ due to large amounts of debt and the possibility of a slowing economy. This put pressure on the financial markets today, some of which may have spilled over into commodities. Additionally, the US Dollar Index continues to trend higher, likely limiting the upside in wheat.
• Egypt’s wheat tender resulted in a purchase of 300,000 mt from Russia and 60,000 mt from Romania. Russia continues to dominate exports – another negative factor affecting the market. In addition to Egypt, recent tenders by Algeria and Tunisia have also been fulfilled by Russia.
• Kazakhstan’s grain union is estimating their wheat crop at 14.5 mmt, which would allow for exports of about 8.5-9.0 mmt in 23/24.

DAIRY HIGHLIGHTS:

• US spot butter lost 4c on Wednesday and is now down 5c total this week. This is starting to pressure the Class IV trade a bit.
• Class IV futures fell anywhere from 13c to 39c in the nearby months and both September and October lost their $19 handle.
• A quiet spot cheese trade the past two days has kept new buying interest low in the Class III futures market, but the fact that the market is stabilizing is encouraging.
• Tuesday’s Global Dairy Trade auction hit its lowest point in nearly three years.
• There was outside market pressure from a higher US Dollar and a softer grain trade. Corn fell 8.75c and soybean meal lost $4.30 per ton.

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Author

John Heinberg