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Soybeans, corn down on exports, South America

Soybeans were sharply lower on profit taking and technical selling, but still managed to end the week narrowly mixed. Export sales were a marketing year low, China was the big buyer, but it was a routine amount, and unknown destinations canceled on more than China bought. Phase one of the trade deal between the U.S. and China is still expected to be signed January 15th and while the reporting week was the week of Christmas, the report didn’t reflect the expected increase in demand from Beijing. China has reportedly relaxed customs regulations for soybeans from some bordering nations. Conditions in South America mostly look good, with early harvest underway in parts of Brazil and reportedly good yields. The USDA’s attaché in Brazil estimates 2019/20 production at a record 123.5 million tons, with exports of 75 million and a crush of 44 million tons. The Buenos Aires Grain Exchange says more than 84% of Argentina’s crop is planted. New tensions in the Middle East also contributed to the general decline in most commodities. It’s unclear how much of an impact China’s relationship with Iran will have in ongoing negotiations between the U.S. and China. Soybean meal and oil followed beans lower, also weeing pressure from the weekly export numbers. The USDA’s attaché in Malaysia projects 2019/20 palm oil production at 20.6 million tons, down 200,000 from the previous guess on dry weather in some areas and lower fertilizer use. Exports are seen by the office at 18.2 million tons, compared to 18.339 million for 2018/19.

Corn was lower on profit taking and technical selling, pulling contracts to a modestly lower finish for the week. Corn exports were also bearish, as were the conditions in South America and tensions in the Middle East. Mexico was the leading buyer of U.S. corn, but the pace continues to be slower than a year ago because of the competition from South America and Ukraine. The USDA’s new supply, demand, and production numbers are out on the 10th. That includes what will at least be the initial accounting of the 2019 U.S. production total, which hadn’t fully wrapped up in parts of the Corn Belt at the end of 2019. The trade is also watching early 2020 planting projections. Weekly sorghum sales were bearish. U.S. ethanol and DDGS are reportedly also purchase targets by China. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production during the week ending December 27th averaged 1.066 million barrels a day, down 17,000, and stocks were 21.034 million barrels, a decline of 435,000 on the week and 2.128 million on the year.

The wheat complex was lower on profit taking and technical selling, causing a relatively modest week to week loss for the U.S. exchanges. Winter wheat conditions vary widely, with the USDA’s first planted area estimate for winter wheat out on the 10th. That’s been the subject of debate because of the overall slow planting pace caused by wet weather and the corn and soybean harvest delays in double crop areas. Still, any potentially bullish impact from a lower acreage figure might by muted by the USDA projecting a record global supply at the end of the marketing year. Weekly export sales were towards the low end of expectations, down 56% on the week and 46% lower than the four-week average. U.S. wheat is expected to see at least a slight improvement in interest from China after phase one is signed. DTN says Morocco is tendering for 354,000 tons of U.S. durum. Ethiopia, Jordan, Syria, and Turkey also have open wheat tenders.

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