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More losses connected to tariffs, weather

Soybeans were sharply lower on commercial and technical selling, with the November contract hitting a new nine year low. The U.S. has placed new tariffs on China and China will likely retaliate, at least in some form. While this round is not expected to directly impact agriculture, it’s a continuation of the trade war. All the recent tariffs will be reflected in Thursday’s USDA numbers out at Noon Eastern/11 AM Central. Additionally, U.S. crop conditions are considered non-threatening in most of the Midwest. Soybean meal and oil were lower, following beans. CONAB currently projects Brazil’s soybean crop at 118.9 million tons, compared to their prior guess of 118.1 million and June’s USDA estimate of 119.0 million tons. The USDA will also be updating world supply, demand, and production numbers on Thursday.

Corn was lower on commercial and technical selling, with December notching a new contract low. Corn is watching the weather, with generally non-threatening conditions in many areas. USDA is expected to raise its 2018 production estimates for corn and beans Thursday, the question is by how much. July is typically a quiet month for this set of reports, but the historically high condition ratings could be an influence, even if there is still a way to go for this year’s crops. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production last week averaged 1.033 million barrels a day, down 34,000 on the week, at least partially because of Independence Day, while stocks were reported at 22.393 million barrels, up 418,000. CONAB pegs Brazil’s corn crop at a combined 82.9 million tons, compared to the previous guess of 85 million, with the second crop totaling 56 million tons. Brazil’s second crop is the larger of the two and the source of most of their exports.

The wheat complex was sharply lower on commercial and technical selling, along with the higher U.S. Dollar index. Spring wheat is in very good condition and the trade expects minimal changes to the world balance sheets. If there are major changes because of crop weather issues in North America, the European Union, the Black Sea region or elsewhere, they’d likely show up in August. Of course, there’s always the potential for a surprise. Weekly export sales numbers are also out Thursday, scheduled for 8:30 AM Eastern/7:30 Central. DTN says Egypt bought 175,000 tons of milling wheat from Russia and Indonesia is tendering for 90,000 tons of 11.5% protein milling wheat from the Black Sea region. According to AgriCensus, Brazil expects to import as much as 5.5 million tons of wheat from Argentina in 2019, which would be up 10% from 2018. The Buenos Aires Grain Exchange says 69.2% of Argentina’s crop is planted. The USDA’s attaché in Australia projects 2018/19 wheat production at 21 million tons, 12.5% less than the official USDA estimate because of hot, dry weather in eastern Australia.

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