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Solid gains for corn, wheat futures

Soybeans were mixed, adjusting spreads. The trade continues to monitor weather in South America, with some recent improvements in parts of Brazil and overall good conditions in Argentina. Still, that planting pace in Brazil is slower than average and there is continued talk of substantial replanting in some areas. CONAB’s updated outlook for Brazil is out December 7th. China bought 134,000 tons of 2023/24 U.S. beans Thursday morning, quite a bit less than what’s been rumored this week, while weekly sales were solid. China was the top buyer, followed by unknown destinations, and while sales are behind 2022/23 because of Brazil, shipments remain on pace with what’s needed to meet projections for the current marketing year. Soybean meal was down on fund selling, while bean oil fell on a drop in crude oil. Domestic crush margins remain bullish and the supply is tight. The USDA’s next set of supply and demand estimates is out December 8th.

Corn was higher on short covering and technical buying. Corn export sales hit a marketing year high at 75.9 million bushels, with unknown destinations and Mexico topping the list. Those sales to unknown could be switched to China later on and China was an outright buyer of 131,000 tons of U.S. corn last week. The sales pace is ahead of last marketing year, with U.S. corn export prices competitive for the next couple of months, when compared to Brazil. Ukraine has also been a strong corn exporter at times this year but continues to run into issues connected to issues created by the war with Russia. That improvement in export demand and solid ethanol margins are canceling out some of the bearishness linked to the record U.S. crop. Conditions in South America are mixed for corn. Argentina’s in better shape than a year ago, while in Brazil, second crop acreage was already expected to be lower than last year and could fall further because of the soybean planting delays. That’s pushed Brazil’s prices sharply higher. There were no first notice day deliveries against December corn.

The wheat complex was higher on short covering and technical buying, despite gains in the dollar. The complex remains oversold, with support from tight domestic supplies and world weather issues, including heavy rain in parts of Australia delaying harvest and lowering quality. Brushfires could be an issue this summer in parts of Australia. Overall export demand is slow, but last week’s sales were up and China was the biggest buyer, fulfilling some recent rumors. Unknown destinations took the second slot and that could end up being switched to China when it’s time for delivery. U.S. soft red winter has become more competitive on the export market, as has French wheat, due to higher cash prices in Russia. The impending shift to winter weather could cause some delays for shipping out of the Black Sea region and there have been indications Moscow wants to slow down sales to some degree. Ag consulting group IKAR is projecting 2024/25 wheat production in Russia at 92 million tons, compared to 91.6 million for 2023/24, with wheat exports next marketing year at 48 million tons, compared to 51 million this marketing year.

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