CORN HIGHLIGHTS:

• The corn market at least took a pause from the selling pressure, but today’s firmer trade was a consolidating type of trade, and disappointing in that the market failed to see some form of true price recovery after Monday’s steep decline. Ongoing strong selling in the soybean market limited rally potential in both corn and wheat during the session.
• The USDA released the latest crop ratings on Monday afternoon. Corn conditions were rated at 68% good to excellent, up 1% from last week and above market expectations. Key corn producing states of Illinois, Iowa, and Indiana, all saw ratings improve week over week. The corn crop is hitting the pollination stage with 24% of the crop silking, up 10% over the 5-year average.
• The July 2nd Commitment of Traders report was released on Monday afternoon. Hedge funds were big sellers in the corn market going into that report, adding 58,872 new shorts to reach a net short position of 336,458 contracts. The strong selling pressure from the USDA Grain Stock and Acres report likely boosted that total. The next commitment of traders report data will be collected today and reported on Friday. It is anticipated that the funds net short position will surpass their peak net short from February.
• Weather forecasts remain overall non-threatening for corn production. Precipitation remaining from Hurricane Beryl is moving through the eastern Corn Belt, providing needed rainfall in some of those areas. Temperatures are to remain above normal, but still in a range that is beneficial for most corn crop development.
• The combination of a large on-farm corn supply and the potential strong harvest will likely keep pressure on the front end of the market and limit rallies. Producers will be looking to move old crop bushels to make room for the potential new crop supply this fall.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower again today after yesterday’s sharp selloff as weather remains mostly favorable and crop conditions improve. Funds have been heavy sellers across the entire ag complex as they anticipate a large crop this fall. Both soybean meal and oil ended the day lower, but soybean oil was the bigger loser with losses in excess of 4% in all contracts.
• Yesterday’s Crop Progress report showed the soybean good to excellent rating rising by one point to 68%, while the poor to very poor rating fell to 8%. Iowa, Kansas, and Ohio improved the most while Mississippi, North Carolina, and North Dakota declined. 34% of the crop is blooming, which compares to the average of 28% and 9% are setting pods which compares to the average of 5%.
• While soybean prices have been falling, crush margins have been rising as a result. Based on August futures, the value of crushed soybeans was $2.44 above the cost of cash soybeans which is one of the most profitable levels since last summer. This has incentivized processors to buy cash soybeans which is supporting the large premium for August futures over the November contract.
• As of July 2, funds were reported to have added 11,263 contracts of soybeans to their net short position which increased to 140,926 contracts. Hedge funds have sold ag products aggressively throughout the past 6 weeks and are now the shortest they have been since September 2019.

WHEAT HIGHLIGHTS:

• Wheat closed marginally higher in Chicago and Kansas City futures but posted small losses in the Minneapolis contracts. Paris milling wheat futures reversed from yesterday’s lower close to post gains of 3.25 to 4.75 euros per mt which was supportive to the US market. However, another increase to the US Dollar Index today limited any upside movement in wheat, along with pressure from the sharply lower soy complex.
• According to the USDA’s Crop Progress report, winter wheat is now 63% harvested, keeping the pace still well above last year’s 43% and the average of 52%. Additionally, the spring wheat crop is rated 75% good to excellent, a 3% improvement from the previous week and the highest rating for this timeframe in five years. Furthermore, 59% of spring wheat is headed versus 66% a year ago and 60% on average.
• Russian wheat export values are reportedly continuing to fall according to IKAR, and this should keep pressure on the wheat complex. Said to range from $216 to $224 per mt FOB, that would be $5 to $10 lower than last week’s values. Part of the reason for the decline is due to their wheat harvest peaking and the supply flooding their domestic market.
• In South America, there is some concern about the winter wheat crops. Planting and crop development are said to be lagging in Brazil, and Rio Grande do Sul is still recovering from historic flooding. In Argentina, soil moisture levels are said to be too low, which may affect establishment of the wheat crop. Widespread frosts in the forecast are also unfavorable.
• France is Europe’s biggest wheat producer, but due to wet weather their wheat production is expected to fall 15.4% this year to 29.7 mmt. This is according to their ag ministry, and if accurate, would be 14.2% below the five-year average. France’s spring weather was said to be the fourth wettest on record and planted area for soft wheat dropped 10.8% compared with 2023.

DAIRY HIGHLIGHTS:

• Class III futures were under pressure today with August down 30 cents to $20.13, erasing the gains from yesterday.
• Spot cheese added 0.375 cents today to close at $1.95375/lb. Barrels had an impressive 15 loads trade but were unchanged at $1.94/lb.
• Futures on the Class IV side were either unchanged or lower. Only the October contract posted any volume today.
• Spot butter was a penny higher to close at $3.14/lb after small losses the last three trading days. Spot powder gave back yesterday’s quarter-cent gain.

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Author

John Heinberg