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Soybeans, corn down on rain in South America

Soybeans were sharply lower on commercial and technical selling. Much of Argentina and Brazil had good weekend rain coverage, but Argentina could turn drier after this round of precipitation. Damage has been done and the overall success of the crop will still depend on timely precipitation. Harvest is underway in Brazil’s key state of Mato Grosso, with 16% of that state’s crop already sold, compared to 4.8% a year ago. Nationally, 0.4% of Brazil’s soybeans are harvested, compared to 1.8% this time last year because of the planting delays due to dry weather. China bought 132,000 tons of new crop U.S. beans ahead of the open, part of the recent improvement in demand after a more than two-month lull in announced sales. Weekly export inspections topped 2 million tons, with China and Spain leading the way. Soymeal was sharply lower on commercial selling. Bean oil was down on the same factors as beans and meal, but was able to close above the session lows, even after a big overnight drop in palm oil.

Corn was lower on commercial and technical selling. Corn is also watching weather in South America, with pressure from the recent improvement in conditions. That said – some damage has been done to yield potential and planting of Brazil’s second corn crop will be delayed. Safras e Mercado has Brazil’s crop at 113.5 million tons, quite a bit more than either the USDA or CONAB. Japan purchased 128,000 tons of U.S. corn and Israel picked up 100,000 tons, all old crop. Export inspections were down on the week, with Mexico and Colombia topping the list, but 2019/20 remains ahead of 2020/21. Sorghum inspections were bullish, with China the single largest destination. China’s general Administration of Customs says it bought a record 11.3 million tons of corn in 2020. Ukraine’s Economic Ministry says corn exports since the start of the marketing year June 1st are 10.52 million tons, Kyiv announcing January 25th if it will limit corn exports to shore up domestic feed supplies. Ethanol futures were steady to lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers will be out Friday, delayed by Monday’s Martin Luther King Jr. observance and Wednesday’s inauguration. The USDA’s weekly export sales report will also be out Friday.

The wheat complex was mixed, mostly modestly higher after an up and down day, but with March Kansas City notching another new contract high. The trade expects an improvement in demand for U.S. wheat because of Russia’s export tax and Argentina’s cap on sales. For now, demand remains slow and the global supply outlook is bearish, with the USDA’s next set of supply and demand estimates out February 9th. Export inspections were bearish, with Indonesia and Mexico the leading destinations. The trade is watching overwintering conditions in the U.S. Plains, the European Union, and the Black Sea region, along with harvest activity in Australia. China sold 3,939,732 tons of wheat from state reserves, 99.74% of the offering, most of that reportedly for feed use because of high corn and bean meal prices. China’s General Administration of Customs says 2020 wheat imports were record large at 8.4 million tons. Ukraine’s Economic Ministry says year to date wheat sales are 12.75 million tons, with total grain sales 18.6% slower than last marketing year.  DTN says Algeria is tendering for 50,000 tons of milling wheat.

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