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Rain potential in Argentina sends corn, soybeans lower

Soybeans were lower on speculative and technical selling, in addition to spillover from the broader market. Most forecasts have improved rain in Argentina and southern Brazil into early next month. That’s expected to stabilize or even improve conditions, but it’ll remain an unknown until that precipitation shows up. Even though the anticipated rainfall is expected to benefit soybeans in South America more than corn, some damage has likely been done to Argentina’s crop, limiting production potential. Export demand for U.S. soybeans is good but will probably tail off as Brazil’s harvest advances. A big issue for Brazil will be available storage capacity for the record expected soybean and corn crops. The USDA’s next set of supply, demand, and production numbers is out February 8th. Soybean meal was lower on profit taking and the lower move in beans, while bean oil was mixed on bull spreading.

Corn was modestly lower on speculative and technical selling, along with outside market pressure, unable to sustain on the early mostly firm activity. Corn is watching South America with uncertainties about rainfall totals and overall coverage but expecting some improvement in conditions. Still, part of Argentina’s crop has been lost and the big test for Brazil is the second crop, which is planted after soybeans are harvested. While export demand is slow, a window could open up later this month as Brazil exhausts old crop supplies with the second crop not hitting the market until this summer. Argentina’s new crop export program will probably be limited by drought impact and while Ukraine’s corn has a significant discount to U.S. prices, their crop was much smaller than the previous year because of Russia’s invasion. The U.S. Energy Information Administration’s weekly ethanol supply and production numbers are out Thursday.

The wheat complex was lower on speculative and technical selling, with early gains evaporating after the dollar moved up from the session lows. The trade is monitoring rain and snow in very dry parts of the central and southern Plains, helping to recharge soil moisture while the hard red winter crop is in dormancy. Another winter storm this weekend could benefit the southwestern Plains. Still, it’s going to take a more widespread and lengthy wetter period to break drought conditions in that region. Soft red winter conditions remain comparatively better than hard red winter. Export demand for U.S. wheat continues to be very slow, with Russia holding most of the market share. Ukraine continues to export wheat, albeit at a reduced pace because of continued Russian attacks and slower inspections of vessels set to leave the Black Sea. Australia had a record crop this year, but quality was cut by heavy rainfall around harvest time. China says it will auction 140,000 tons of wheat from state reserves February 1st.

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