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Soybeans build on recent gains as corn, wheat wilt

Soybeans were higher on commercial and technical buying. Soybeans were followed bean meal, which was up on commercial support and weekly export sales, while watching weather in South America. Recent rain in South America has largely favored Argentina over southern Brazil, impacting yield prospects. Portions of central and northern Brazil have seen harvest delays. Next week, most of the region could see a return to hot, dry conditions. There have been more production projection reductions recently, with the new USDA outlook scheduled for February 9th. CONAB’s updated estimate for Brazil is out February 10th. China’s National Grain and Oil Information Center says domestic soybean meal stocks are close to two-year lows with buying interest picking up steam ahead of the Lunar New Year festival, which gets underway next week. U.S. soybean export sales were just over a million tons, well above the previous week and the four-week average, with China and Mexico topping the list, but also featuring a cancellation by unknown destinations. Soybean oil was mixed, mostly higher, on bull spreading.

Corn was modestly lower on profit taking and technical selling, along with the losses in wheat. Near-term weather in South America continues to look neutral to bearish, but longer-term outlooks are less certain. The critical crop for South America will be Brazil’s second crop, the largest of the three and the source of most of their exports, which is planted after soybeans are harvested. Ethanol demand is slowing down, with U.S. stocks last week at their highest level since 2020. Corn is also monitoring political tensions between Russia and Ukraine. Both nations are major competitors for U.S. corn on the export market. Weekly U.S. corn sales were up sharply on the week at 1.4 million tons, with Japan and Mexico topping the list. Ethanol futures were unchanged. The USDA’s attaché in South Africa estimates 2021/22 commercial corn production at 15.5 million tons, compared to 16.234 million in 2020/21, with the year-to-year decline tied to heavy rainfall late last year and early this year. 2021/22 exports are seen at 3 million tons.

The wheat complex was sharply lower on profit taking and technical selling. The tensions in the Black Sea region have eased somewhat but remain a concern. Any conflict between Russia and Ukraine would significantly disrupt, if not temporarily end, shipping out of the Black Sea region. Much of that business would likely be picked up by the European Union, with a smaller amount to the U.S. Last week’s U.S. export sales were a marketing year high, with the Philippines and Nigeria the two biggest buyers. Still, in the third quarter of the 2021/22 marketing year, the overall pace remains behind 2020/21. By type, hard red winter and hard red spring continue to see the strongest demand, but only soft red winter is ahead of last marketing year. There’s snow in parts of the U.S. Plains, with the potential for more precipitation in some areas next week. Still, most of that region, southern to northern and northwestern, is in a drought, which will impact not only winter wheat development, but also 2022 spring wheat planting in the U.S. and Canada. The USDA’s attaché in Australia estimates 2021/22 wheat production at a record large 34 million tons, compared to 33.3 million in 2020/21, with exports this marketing year at 25.5 million tons, compared to 23.812 million last marketing year.

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