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Corn, wheat gain on yield concerns

Soybeans closed mixed on spread trade and profit taking. Beans were up early on concerns about weather’s effect on yield ahead of Friday’s USDA numbers but sold off as bean meal retreated from its highs. The initial support for bean meal came from strong domestic cash demand, which gave way to bull spreading. That supported by nearby months and is a sign of that strong cash demand. China bought 196,000 tons of new crop U.S. beans Wednesday morning, the third out of the last four business days with a reported sale of U.S. beans to either China or unknown destinations. The USDA’s weekly sales numbers are out Thursday morning. This is the time of year when demand typically starts to shift from Brazil to the U.S. ABIOVE estimates Brazil’s 2021/22 soybean crop at 126.6 million tons, compared to 138.8 million for 2020/21. CONAB’s next estimate for Brazil is also out Thursday.

Corn was modestly higher on commercial and technical buying. Corn is monitoring yield estimates with many analysts expecting a reduction by the USDA in Friday’s report. Any significant change to the production numbers will probably wait until September. The U.S. Energy Information Administration says ethanol production last week averaged 1.022 million barrels a day, a decrease of 21,000 on the week, but an increase of 36,000 on the year, with stocks of 23.256 million barrels, down 138,000 from the previous week, but up 500,000 from a year ago. There’s talk of the European Union in the market for corn from either the U.S. or Brazil, but nothing’s surfaced yet. The E.U. corn crop has been hit by hot, dry weather. About 80% of Brazil’s second corn crop has been harvested.

The wheat complex was higher on commercial and technical buying. Hot, dry weather in parts of the northern Plains is having an impact on spring wheat. Most of the adjustments for wheat Friday are expected to be on the global side of the ledger. The USDA could raise wheat production for Russia, while cutting the outlooks for Argentina and India. The big uncertainty is what kind of adjustments will the USDA make for Ukraine, if any. Those unknowns for Ukraine include winter grain harvest and storage for that grain, new crop planting, and exports.

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