This Week in Commodities 06-03-2022

Corn Sharply Lower this Week

  • July corn futures shed 50-1/4 cents this week to close at 727.
  • New crop December corn futures shed 40 cents this week to close at 690.
  • This was the worst week for front month corn since May of 2021.
  • Russia’s defense ministry said on Thursday that vessels carrying grain can leave Ukraine’s ports in the Black Sea via “humanitarian corridors” and Russia is ready to guarantee their safety, according to the Interfax news agency.
  • July corn futures pushed to their lowest levels since April 1st this week on a continued favorable weather outlook for the US Corn Belt.
  • Ethanol production for the week ending May 27 averaged 1.07 million barrels per day. This is up 5.62% from the previous week and up 3.58% from a year ago. Total production for the week was 7.497 million barrels.
  • A good end to the growing season in much of South America has spurred talk of record corn production for Brazil’s second crop corn.

Soybeans Fail at New Contract Highs

  • July soybean futures shed 34-1/2 cents this week to close at 1697-3/4.
  • New crop November soybean futures shed 17 cents this week to close at 1527.
  • Favorable weather across much of the Midwest this week allowed for a continued progression in soybean planting.
  • After trading to new contract highs to start the holiday shortened trading week, new crop November soybean future closed lower on the week.
  • Farmers in Argentina are selling their soybeans at the slowest pace in at least a decade, at just 18% of the crop through the 3rd week of May, according to reports. This is not helping the already tight world soybean supply chain.
  • Argentina’s soybean harvest is now seen at 43.3 million tons, up from 42 million previous, due to better-than-expected yields, according to the Buenos Aires Grain Exchange.
  • For the first 8 months of 2021-22, soybean crush totaled 1.492 billion bu., up 1.4% from the same period last year. The crush pace must average 180.8 million bu. per month over the final 4 months of 2021-22 to hit USDA’s forecast of 2.215 billion bushels.


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All Wheats Sharply Lower this Week

  • July CBOT wheat futures shed 117-1/2 cents this week to close at 1040.
  • July KC wheat futures shed 114-1/4 cents this week to close at 1121.
  • July MPLS spring wheat futures shed 113 cents this week to close at 1191-3/4.
  • More talk over a shipping corridor for Ukrainian grain with the ongoing war with Russia added pressure to the wheat market this week.
  • It remains unclear if Russia will allow Ukraine to export grain, but there are roughly 22 mmt of old-crop wheat held captive in Ukraine that could be shipped if allowed.
  • This was the worst week for front month CBOT wheat since March of 2008 when prices fell more than $2 per bushel.

Milk Starts June Off Strong

While the July Class III contract was pretty quiet this week, settling down a couple pennies to start the new month, most deferred contracts closed with solid gains. The Q4 average added 23 cents to retest its recent high from mid-April, while the Q1 average rallied nearly 50 cents to push back near the $22.00 mark. Spot cheese dropped 3.00 cents this week with a close at 2.2275/lb, closing lower 8 of the last 11 sessions, after posting a new 2022 high on May 18th. Whey prices were able to post their first consecutive weekly gains since January, but Class III futures will likely find it hard to trade much higher if the block/barrel average cannot find some footing.

Class IV price action was a force this week with every remaining 2022 futures hitting a new contract high, while most 2023 contracts moved back up near recent peaks. Butter was the main catalyst with spot prices matching the high from January on Thursday at $2.9350/lb and second month futures moving to just beneath all-time highs from 2014. The Class IV second month chart hit a new all-time high at $26.12, a nearly 10% extension off the previous best ever from eight years ago. Next week should be an exciting one, as it entails a GDT Auction, the April Dairy Export report, and the June WASDE report.


Keegan Madigan

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