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Soybeans bounce off lows as corn, wheat drift downward

Soybeans were firm to modestly higher on short covering and technical buying. Beans were oversold and able to find support near the recent lows, still watching U.S. harvest activity, with generally dry weather in the forecast for the rest of the week. Interior movement, especially movement to port, continues to be an issue for soybeans. Last week’s export inspections were a marketing year high, but well below a year ago, reflecting that slow movement, with increasing concerns in China about tighter supplies. Planting conditions look good in most of Brazil and rain is in the forecast for parts of Argentina early next week but could miss some of the drier areas. Soybean meal futures were lower on commercial selling, continuing that recent trend, while bean oil was sharply higher on a big gain in crude oil and spillover from palm oil. Domestic soybean crush margins remain firmly in bullish territory.

Corn was modestly lower on fund and technical selling. The U.S. harvest is getting closer to the halfway point and export demand continues to be slow, with U.S. corn at a premium to major competing origins. Low water levels are inhibiting movement on the Mississippi River, impacting the shipping pace of corn, adding to those demand woes. The U.S. Energy Information Administration says ethanol production last week hit a 10-week high at 1.016 million barrels a day, an increase of 84,000 on the week, but a decrease of 80,000 on the year. The domestic supply was reported at 21.844 million barrels, 19,000 less than the previous week, but 1.764 million more than a year ago.

The wheat complex was lower on fund and technical selling. Wheat tried to rally but was pressured by the dollar as the trade continues to monitor the situation in the Black Sea region. Russia’s war with Ukraine is ongoing, keeping two major wheat exporters in flux. Ukraine’s grain exports are nearly at pre-war levels, but that continuing will depend on the extension of the Black Sea shipping corridor, while Russia’s exports have been limited by sanctions and regular customers turning elsewhere for their wheat, including Ukraine. Negotiations about that corridor also involving the U.N. and Turkey continue, with the current agreement set to expire November 22nd. SovEcon estimates Russia’s 2023 wheat crop at 84.8 million tons, down from the record 100.6 million tons produced in 2022. About 70% of Russia’s wheat crop is winter wheat. Egypt’s General Authority for Supply Commodities did not buy wheat in a proposed private deal this week, reportedly citing high prices. Around 60% of Ukraine’s winter grain crop has been planted, with total area expected to be considerably smaller than a year ago. Rain is in forecast for large parts of the U.S. wheat growing region, except for most of the southwestern Plains. Heavy rainfall in eastern Australia ahead of widespread harvest is leading to quality concerns.

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