July corn futures shed 2-3/4 cents this week to close at 656-3/4. New crop December corn futures shed 1 cent this week to close at 545-1/2. Markets and TFM offices will be closed Monday in observance of the Memorial Day holiday. Price action in next week’s holiday-shortened trade week will be closely monitored by the trade with this Wednesday’s low in December corn just above $5 being a psychologically significant level. A break below $5 would more than likely spark additional speculator and farmer selling in new crop corn. This week’s roller-coaster trade, sharply lower on Tuesday then sharply higher on Thursday, highlights the speculative interest and volatility that is highly likely here to stay as the calendar flips to June and into the summer months of 2021.
Cool rains, but precipitation nonetheless fell across some areas that needed it the most this week. “Million-dollar rains” are not often discussed this early in the growing season but for many in Iowa, Minnesota and much of the Upper Midwest the last ten days have been a blessing after a dry start to spring. Temperatures are forecast to dip into the thirties for some areas in Iowa, Minnesota, and Wisconsin overnight tonight. While unseasonal for late May, any crop damage should be minimal at best with temperatures expected to rip back towards 70 by Memorial Day. The 8–14 day outlook continues to look supportive to crop development for the Corn Belt with above-normal temperatures and a slight probability for above-normal precipitation.
Beans post quiet week amidst corn market volatility
July soybean futures added 4-1/4 cents this week to close at 1530-1/2. New crop November futures closed at 1372-3/4. With near-perfect weather and planting pace well ahead of normal, the US soybean crop looks to be off to a great start. While dry areas still remain in the Dakotas and northern Midwest it is too early to assume a significant weather problem is developing. The Buenos Aires Grain Exchange bumped Argentina’s 2020/21 crop of soybean to 43.5 million tons up from 43 million tons citing better yields across the country. This is below the Exchange’s initial outlook of 46.5 million tons and below both the USDA and Argentina’s ag ministry estimate of 47 million tons.
US Trade Representative Kathrine Tai called the US/China trade and economic relationship “very, very challenging” after a meeting with China this week. Chinese officials described the call as “candid, pragmatic and constructive.” Tai was also quoted saying “If China cannot or will not adapt to international rules and norms, we must be bold and creative in taking steps to level the playing field.” Chinese corn and soybean demand into 2021 play a huge role in the current projected tightness for both crops. Demand swings of a couple hundred million bushels have occurred in recent years and could dramatically change the look of US soybean carryout projections.
Spring wheat higher this week on poor ratings
The key component to the recent price action in the dairy markets continues to be the spot cheese market. The block/barrel average finished this week 3.875 cents lower at $1.55/lb. With the recent break in the market, the next level of support for the market lies at the 2021 lows near $1.48/lb. In the Midwestern Cheese report released by the USDA, cheese processors reported that there has been an influx of spot milk lately and there have been loads being sold at heavily discounted levels vs. class prices. The report also noted that processors worry that with barrel prices currently over the block price that barrels could continue lower to get to their normal position below blocks in price.
The Class IV market has also been disappointing here this week with what looks to be a rejection near multi-year highs to put in a short-term top in the market. Prices were hovering closer to $17.00 before they lost momentum and now the second-month contract sits at $16.54. While it isn’t surprising that the market struggled at such a pivotal price point, but with global prices continuing to be higher than domestic prices for non-fat powder and butter, there was a chance that Class IV could have experienced a larger breakout. This could still happen if global prices continue to stay at elevated levels and our exports continue to grow at a rapid pace.