CORN HIGHLIGHTS:

• Corn showed some muscle to finish near session highs, following through from yesterday. This may in part stem from skepticism of the USDA’s latest numbers.
• The 8-14 day weather forecast may also have lent some support to futures today, with an outlook for warmer and drier conditions across much of the Midwest. With 64% of the US corn crop said to still be experiencing drought conditions, fundamental support may be building at these lower price levels.
• On a bearish note, CONAB increased their estimate of Brazilian corn production to 127.8 mmt from 125.7 mmt previously, which for now, is likely to keep pressure on the export front.
• Although the US dollar was slightly higher today, it is still well below where it was a week ago. This decline has likely taken some downward pressure off the grain markets and allowed for some breathing room.

SOYBEAN HIGHLIGHTS:

• Led by negativity in the energy markets, weakness in soybean oil weighed on soybeans and likely led to some profit taking and choppy trade after posting a new high for the move. Both Old and New Crop contracts closed the week in relative unison, with August beans showing a 52-1/2 cent gain, while November posted a 53 cent gain, despite the USDA’s bearish report on Wednesday.
• Following Wednesday’s surprising USDA report, some are questioning the USDA’s 52 bpa yield estimate with 57% of the US soybean crop experiencing some level of drought, though this is down 3% from last week.
• China has reportedly been an active buyer of Brazilian soybeans, purchasing 20-25 cargoes for May-July 2024 delivery, in addition to US soybeans purchased off the PNW for October delivery.
• Expectations for Monday’s NOPA soybean crush report are for 170.568 mb of soybeans crushed in June, down 4.1% from May, but expected due to seasonal downtime for maintenance and repairs, and if realized, it would be a record for the month.
• Updated Consumer Price Index (CPI) and Producer Price Index (PPI) information released this week showed inflation levels are slowing, reducing the possibility of further rate hikes by the Fed, and likely adding early support to prices.

WHEAT HIGHLIGHTS:

• News reports that India will ban rice exports may have contributed to the strong close in the wheat market. India generally exports a large percentage of the world’s rice, so if they are short on supply, they may turn to wheat as another food staple. Some believe this could mean they will need to import wheat down the road, offering support.
• Early next week, the Black Sea export corridor deal will expire. As of this writing, no agreement on an extension has been reached. Russia has allegedly stated that they will offer an extension, but only in exchange for reduced sanctions on their banking system (namely, being let back into the SWIFT program). Either way, this could mean more volatility for wheat next week.
• According to the Buenos Aires Grain Exchange, their 23/24 wheat planting estimate for Argentina is unchanged from their last projection at 6.0 mmt.
• Canada is still too dry, and it is impacting their spring wheat crop. Much like areas of the northern US Plains that are experiencing the same problem.

DAIRY HIGHLIGHTS:

• Spot products continue to find eager buyers, butter and cheese prices finished the week higher while powder and whey were both lower.
• Milk futures in Q3 and Q4 for both Class III and IV found gains on the week, breaking multi-week trends lower.
• Dairy cow culling rates have continued to be well above last year’s totals. For the week ending 7/1, rates were 14.5% higher YoY, the highest total for this week in 10 years.
• Fundamental reports and events next week include GDT on 7/18, Milk Production report on 7/20, Cattle and Cattle on Feed report on 7/21.

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Author

Brandon Doherty