July corn futures added 26 cents this week to close at 682-3/4. December futures added 46 cents this week to close at 591-1/2. Currently 24% of corn production is within an area experiencing drought here in the US. Much of the area is along the Minnesota/Iowa border as well as into the Dakotas and southern Wisconsin. The latest 10-day global forecast output is calling for decent coverage of an inch or more, in the affected areas with lesser amounts in South Dakota. The rest of the corn belt is also forecasted for more than an inch of rain coverage over the next 10-days. With the crop currently rated 76% good to excellent next weeks heat and forecasted rains should keep the rating well supported.
US ethanol output last week hit 1.034 million barrels per day, a post-covid high. This week’s output lifts the 4-week average over 1 million barrels per day, down less than 1% on the 2017-2019 average for the period. Old-crop corn export sales through May 27th were better than expected with Japan and China as the lead buyers. New crop sales were below expectations but as a whole still remain well ahead of previous years for sales on the books this far ahead of the marketing year.
Beans Pushed Higher Following Soybean Oil
July soybean futures added 53-1/4 cents this week to close at 1583-3/4. New crop November futures added 62-3/4 cents this week to close at 1435-1/2. This was the highest weekly close for November of 2021 soybean futures contract. Soybean oil futures ripped back to fresh contract highs this week taking soybeans futures higher as well. World edible oil prices and US weather will be main drivers of the soybean market in June. Soybean oil and other vegetable oils have been leading the soybean rally as increased biodiesel purposes and restaurant usage as food consumption away from home continued to recover. Continuous soybean oil futures are trading over 150% higher than on this date in 2020.
The US dollar worked slightly higher once again this week. Many market watchers feel the dollar has been establishing a low over the last month. The index has traded below but closed above 90 in the last three weeks. If the dollar is in fact establishing a low and set to move higher US commodity exports would become less competitive in the world export market.
Spring Wheat Higher Once Again
Class III milk futures were dull this shortened holiday week with front month June contract finishing the week up 7 cents, the July contract down 18 cents, and the August contract down 7 cents. Cheese prices had a similarly uneventful week as the block/barrel average finished 0.75 cent higher at $1.5575/lb, breaking the streak after four weeks of lower prices. However, Class IV markets were 22 cents, 36 cents, and 44 cents lower by week’s end for the June, July, and August contracts, respectively, solidifying the fact that heavy long-term resistance remains in place at around the $17.00 mark. Butter prices slipped 3.5 cents in that time to fall to $1.775/lb.
Feed prices were mixed to start June as corn rebounded with the July contract up 26 cents over four trading days, moving back to 52.5 cents off the contract high from a month ago, while soybean meal hovered near unchanged just under the $400/ton level. The higher feed prices aided in the most recent run-up on milk prices and weather may keep prices elevated in the short-term. The Class III to Class IV spread narrowed to as low as $0.56 earlier this week, but pushed back up around $1.20 with the Class IV weakness.