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Soybeans, corn down on rain chances in Argentina, Brazil

Soybeans were modestly lower on fund and technical selling. Most forecasts have at least scattered rainfall this week in parts of Argentina and southern Brazil, but totals could be low and coverage should be spotty. Any losses in Argentine production are expected to be canceled out by Brazil. CONAB’s updated outlook for Brazil is scheduled for this Thursday, one of several reports out, including the preliminary 2022 U.S. soybean and corn production totals. U.S. soybean export inspections topped 1.4 million tons, a little bit less than the previous week, but above last year with the overall pace on track to meet USDA expectations. The leading destinations were China and Italy. Beans also saw some spillover from profit taking in bean meal, while bean oil was up on product spread trade and a higher move in crude oil. The big question for demand continues to be China. On one hand, Beijing’s relaxation of COVID restrictions is expected to lead to some increase in demand, but on the other hand, the rising rate of COVID infections in China could lower demand.

Corn was modestly lower on fund and technical selling. Corn is watching weather in South America, with most of Argentina and southern Brazil expected to see some rain, but damage has been done. The big test for South America will be the performance of Brazil’s second crop, which is planted after soybeans are harvested. The USDA’s updated supply and demand numbers are out Thursday, in addition to the weekly export sales numbers. Export demand for U.S. corn is slow and ethanol demand is declining, but for now, feed use numbers remain solid. U.S. export inspections were down sharply on the week and the year, mainly to Mexico and China. Ukraine’s Ag Ministry says that nation has exported 13.3 million tons of corn since the start of the marketing year July 1st, with the overall pace behind a year ago due to Russia’s invasion and the subsequent war.

The wheat complex was mixed, with most contracts unable to follow through on initial gains. Contracts are oversold and drought conditions are having an impact on hard red winter conditions in the southwestern U.S. Plains. Soft red winter conditions are comparatively good. Thursday, the USDA will report its 2022 U.S. winter wheat planted area, but losses connected to drought or winterkill won’t be known until the crop emerges from dormancy. Any upside will be limited by the slow export demand for U.S. wheat. Export inspections were above a week ago, below a year ago, and still in-line with what’s needed to meet USDA projections for the current marketing year. The primary destinations were China and Ethiopia. Most of the wheat export market continues to be held by Russia and Ukraine. Ukraine’s Ag Ministry says at the halfway point of the marketing year, wheat exports are 8.6 million tons, slower than last marketing year because of the invasion by and the ensuing war with Russia. Russia’s Ag Ministry says it will cap grain exports at 25.5 million tons from February 15th through the end of the marketing year June 30th, which should slow the pace of movement. Hiring and insurance costs are rising in the Black Sea region, also likely impacting export business to some degree.

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