Old crop lower, New crop higher this week

July corn futures shed 3-1/2 cents this week to close at 781-1/4. New crop December corn futures added 28 cents this week to close at 748-3/4. With the warmer and drier conditions this week, planting progress for many areas should have greatly increased. Much of Illinois, Indiana, and eastern Iowa received little to no rain over the last week. The one glaring exception to expected planting progress across the Corn Belt would be in west-central Minnesota where some areas have received as much as 8 inches of rain over the last seven days. Most of the USDA data carried a bearish tilt for the corn market, as global and US usage were below traders’ expectations. 2022/23 US corn yield and production were the exception to the bearish numbers. This, along with support from the wheat market, sent prices higher late in the session on Thursday.

December corn close rallied 42 cents from Tuesday’s open to Thursday’s close this week and traded to a new contract high in the Thursday night trade session. The USDA estimated 2022/23 corn yield at 177 bushels per acre versus an average trade expectation of 179.9. The USDA cited the slow start to corn planting pace into early May as one of the reasons behind lowering expected yield this early on in the year. Using the fresh supply and demand projections for the 2022/23 marketing year stocks to use ratio is forecast at 9.3%, this would be down from the current 2021/22 stocks to use ratio of 9.6%.

Soybeans higher this week

July soybean futures added 24-1/2 cents this week to close at 1646-1/2. New crop November soybean futures added 27-1/2 cents this week to close at 1498-1/4. Much of the data from Thursday’s USDA Supply and Demand report was in line with trade expectations going into the report for soybeans. US meal consumption is expected to increase 2% in 2022/23, and global consumption is expected to grow 3%, which provides some support to the market. The USDA report showed US 2022/23 soybean yield at 51.5 bushels/acre, if realized this would be the second-highest US soybean yield ever. Production came in at 4.640 billion bushels versus an average expectation of 4.626 billion. Ending stocks came in at 310 million bushels versus an average expectation of 312 million.

The weekly export sales report showed that for the week ending May 5, net soybean sales came in at a total of 5.28 million bushels this was down from the week prior. Cumulative soybean sales have reached 101.6% of the USDA forecast for the 2021/2022 marketing year versus a 5-year average of 96.8%. Soybean meal has shed over $70/ton in the last month and traded below $400/ton on its front-month contract early this week. Front-month soybean meal prices have not been below $400/ton since January of this year.

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Wheats higher this week

July CBOT wheat futures added 69 cents this week to close at 1177-1/2. July KC wheat futures added 111-1/2 cents this week to close at 1282. July spring wheat futures added 116-3/4 cents this week to close at 1325-1/2. All three wheats closed sharply higher on Thursday following the release of the USDA’s May Supply and Demand report. One of the most bullish surprises on the report was the 2022/23 KC wheat production estimate which was nearly 100 million bushels below the average trade expectation. The estimate at 590 million bushels would be down from the 749 million bushels produced last year, a 21% drop year over year. US 2022/23 all wheat production came in at 1.729 billion bushels versus an average trade expectation of 1.820 billion. All wheat ending stocks for 2022/23 came in at 619 million bushels versus an average trade expectation of 664 million. Spring wheat planting progress continues to lag as more rounds of rain slammed the northern plains this week. Some areas of eastern North Dakota and northwestern Minnesota have seen over 10 inches of precipitation in the last month.

Class III Milk Down 4th Week in a Row

The second month Class III milk futures contract finished the week at $23.83 per hundredweight. This is $1.96 off of its mid-April high. A higher U.S. dollar, a falling soybean meal feed market, and a steady rise in cow numbers to start the year are all pressuring the market lower at this time. The U.S. whey price is also over 38% off of its high of the year and is nearing 2021 lows. Per this week’s U.S. central whey report, “end users say the only thing they are in need of is more space in their warehouse, as they are currently full in regards to whey supplies.” High inventory levels are weighing on that market. The U.S. whey price fell 5.25c this week, cheese was down 1.375c this week, and powder fell a penny. Butter posted a nice week overall, adding 6.50c to $2.7050/lb.

Next week there will be another Global Dairy Trade auction, which should be watched closely by the market. The GDT is coming off of the May 3rd event in which global price levels fell 8.50%. That event also marked the fourth auction in a row that the GDT price index finished lower. Should there be more pressure on global levels again next week, it could keep Class III and IV milk futures here in the U.S. in a downtrend. However, if buyers step back in and show aggression at these lower levels, it could help the U.S. market turn back higher. The USDA will also put out the April Milk Production report next week Wednesday. The market will look to see if the U.S. cow herd grew once again.