Corn follows wheat lower this week

• July CBOT corn futures shed 2-1/2 cents this week to close at 778-3/4.
• New crop December corn futures shed 16-3/4 cents this week to close at 732.
• With only six trading days remaining in the month of May, December corn futures are on track to have their first monthly close lower since December of 2021.
• Spillover weakness from wheat futures late in the week dragged corn futures back to the middle of the range in which they have spent most of the last two months.
• Cumulative corn export sales have reached 93% of the USDA’s forecast for the 2021/22 marketing year versus a 5-year average of 90%. Sales need to average 288,000 tons per week to reach the USDA forecast.
• July corn has not made a new high since April 29. July futures stalled out just above $8 early this week.
• Argentina could lift their corn export cap to 35 million tons, according to the Ministry of Agriculture’s comments to Reuters on Thursday. This would be up from 30 million tons currently and 25 million in December. The USDA sees their exports for the 2021/22 season at 39 million tons.

Soybeans higher this week on strong exports

• July CBOT soybean futures added 58-3/4 cents this week to close at 1705-1/4.
• New crop November soybean futures added 23-1/2 cents this week to close at 1521-3/4.
• Soybeans and soybean meal were one of the few commodities to trend higher this week.
• After briefly trading below $400/ton July soybean meal found buying support this week posting its best week since early March.
• Export sales of US old crop soybeans were above expectations this week coming in at 753,000 tons.
• China has imported over 28 million tons of soybeans from January to April of this year, this comes within 1% of last year’s record for the same time period.
• After enacting a ban on palm oil exports less than a month ago, Indonesia announced this week exports will resume on Monday. The price has not yet reached the government target, but the government considers the welfare of the 17 million workers in the palm oil industry according to President Widodo.
• The US Drought Monitor this week showed much of the soybean growing regions free of drought stress.

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Wheats lower this week with poor price action

• July CBOT wheat futures shed 8-3/4 cents this week to close at 1168-3/4.
• July KC wheat futures shed 29-1/4 cents this week to close at 1252-3/4.
• July spring wheat futures shed 46 cents this week to close at 1279.
• After gapping higher on the Sunday night trade all three wheats closed lower this week, this is rather poor price action.
• The annual Wheat Quality Council tour found Kansas wheat yield potential at 39.7 bushels per acre, the lowest since 2018 and the five-year average of 47.4 bushels per acre.
• The USDA has Kansas yields estimated at 39 bushels per acre and is projecting the KC wheat crop to be the smallest since 1963.
• A few months into the war in Ukraine, demand for Russian wheat remains strong, and there is little sign that exports will fall soon.
• The five-day forecast shows decent rain amounts for more than half of Kansas, with heavier amounts for all of Oklahoma and Texas. The improved moisture could help crop conditions improve.

Milk gains this week, but cheese barrels struggle late

Class III milk futures were supported this week by steady cheese demand that pushed cheese to a new high of year. On Wednesday of this week, the US block/barrel average cheese price closed up at $2.4125/lb, its highest close since November 2020. The surge in demand and the recovery from the recent sell-off brought buyers back into class III milk futures and took the market back up to the $25 per cwt level. Contracts failed to make new highs, but were within striking distance. Late in the week, the barrel cheese market fell 5c lower on Thursday and 5.25c lower on Friday, so the rally subsided a bit. Class IV milk was supported by a rise in US butter this week, adding 14.50c for the week. A bullish milk production report on Wednesday also added fuel to the fire.

In this Wednesday’s milk production report, the USDA said that April US milk production fell 1.00% from a year ago. Milk per cow was unchanged from a year ago, but US cow numbers were down 98,000 head from April 2021. Additionally, 18 out of the top 24 milk producing states in the US saw production fall year-over-year. US cow numbers had risen 13,000 head from January to February and gained 22,000 head from February to March, but the rise stalled in April. The USDA said cow numbers were flat from March to April. The 1.00% decline in production for April follows March’s 0.40% decline, February’s 0.90% decline, and January’s 1.70% decline. Fundamentally, these numbers are bullish and support higher price levels.