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Correction continues for corn, soybeans, wheat

Soybeans were mostly lower on spread trade and profit taking, with May the only contract to finish in the black, getting ready for Friday’s first notice day. The fundamental outlook remains bullish, but contracts are overbought. Still, the losses in deferred months have been limited by tight new crop ending stocks expectations and the trade trying to encourage an increase in U.S. acreage. Brazil’s FOB prices have moved mostly lower as the harvest draws to a close and while rain in the U.S. will delay planting, it will also recharge soil moisture. Soybean oil was mixed, with nearby months up, including a limit up move in May, and deferred contracts down on commercial spread adjustments. Bean meal was down on profit taking. Russia is reportedly considering a soybean export tax starting July 1st of 20% but not less than $100 per ton. Some private firms are projecting big April soybean sales for Brazil, which has taken over most for most of the demand from China.

Corn finished modestly lower on profit taking and technical selling, unable to hold onto the gains in the nearby contracts, including a brief limit up move in May. Corn is also looking at bullish fundamentals and overbought signals, and U.S. corn prices could be seen as prohibitive for sustained export demand. Farmer selling has increased in parts of the Midwest because of those high prices and the near-term supply remains tight. Corn is also watching planting delays in the Midwest and Plains. The trade is continuing to monitor second crop conditions in Brazil very closely. Some dry weather damage has likely occurred, but rain in the forecast next week would help. Argentina is expected to see some near-term rain, delaying harvest activity. Ethanol futures were unchanged. The U.S. Energy Information Administration says ethanol stocks tightened for the fifth consecutive week, hitting a six-month low at 19.736 million barrels, a decline of 711,000 on the week and 6.601 million on year, while production averaged 945,000 barrels a day, up 4,000 from the previous week and 408,000 from a year ago, but 79,000 less than this point in April 2019.

The wheat complex was lower on profit taking and technical selling, peeling back a little from the recent highs. Dry parts of the Plains, Midwest, the European Union, and the Black Sea region all have at least some rain in the forecast. Stateside, the trade is continuing to assess recent winter wheat freeze damage and just how much spring wheat planting intentions have been changed by conditions in the northern and northwestern Plains. Globally, there is still the likelihood of a record large world crop this year, but that will depend on weather going forward in those key growing areas. The USDA’s next set of international production estimates is scheduled for May 12th, in the monthly supply and demand update. The recent rally has mostly priced U.S. wheat out of the export market, with the USDA’s weekly numbers out Thursday morning at 8:30 Eastern/7:30 Central. The trade is also monitoring increases in feed wheat demand due to high corn and soybean meal prices.

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