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Soybeans bounce back with help from bean oil

Soybeans were modestly higher on short covering and technical buying. Beans had some help from the higher move in bean oil, while watching development weather in Argentina and delayed harvest activity in Brazil. The USDA’s updated production numbers are out March 8th and CONAB’s new outlook for Brazil is set for March 9th. Some soybean crushers in Argentina have reportedly bought back meal and oil contracts for March delivery to avoid defaulting on the contracts due to tight supplies and shipping delays. Export numbers were about neutral with slow sales against solid shipments, and unknown destinations bought 128,000 tons of 2022/23 U.S. soybeans ahead of the open. Last week’s big old crop buyers were China and Mexico with a cancellation by unknown, while China and unknown led the way for new crop. Competition is rising, with Brazil’s cash basis now well below U.S. levels. Soybean meal was mostly higher on spread trade and oversold signals, while bean oil was up on a higher move in palm oil.

Corn was mostly modestly lower on spread trade and follow-through selling. Export sales were over a million tons, but lower than average, and the overall pace continues to trail last marketing year by a wide margin due to the slow pace of shipments. The leading old crop customers last week were Mexico and China, with 100,000 tons of new crop to Mexico as well. Brazil is on track to surpass the U.S. as the world’s largest corn exporter. Planting of Brazil’s third crop is slower than average due to the soybean harvest, but projections continue to hang around lofty levels. Recent rain in in Argentina has fallen short of expectations ahead of a return to drier weather and the potential for an early frost.

The wheat complex was mixed, with Chicago down and Kansas City and Minneapolis up. There’s more precipitation this week in parts of the Plains and Midwest, but it could miss some of the drier wheat growing areas. Export sales were lower than average, mainly to Taiwan and Japan, with Russia holding most of the global market share. Ukraine is still exporting grain, just at a reduced pace due to slower inspections by Russia. With about a month remaining, the future of the Black Sea Grain Initiative is in doubt, mostly because of Russia’s complaints about sanctions even as it continues to mount offensives against Ukraine. The ongoing war will also impact new crop planting in Ukraine. The USDA’s attaché in India projects 2022/23 wheat production at 100 million tons, 3 million less than the official guess, also tightening the domestic supply outlook. India is expected to increase planted area for 2023/24 to raise supplies and pull back record domestic prices. The office also slashed exports, reflecting the ban from Delhi.

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