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Soybeans, corn drop on expected rain

Soybeans were sharply lower on fund and technical selling but managed to avoid a limit down finish. Most weather outlooks have broad rain coverage in the Midwest over the next 10 days. That’s expected to hit some of the drier areas of the region but could cause flooding in other areas. The USDA says 59% of U.S. soybeans are in good to excellent shape, down 1% on the week and 12% from this time last year, with 29% of the crop blooming, compared to the five-year average of 24%, and 3% at the pod setting stage, matching the average. Still, this crop isn’t made and all expectations are for this and next marketing year to continue to have historically tight carryover projections. Soybean export inspections were down on the year, but 2020/21 remains well ahead of 2019/20, with two months left to go. The top destinations were Mexico and Japan. Low water conditions on the Parana River continue to impact movement to ports in Argentina, with river levels at a near 80-year low. Soybean meal and oil were sharply lower, following the lead of beans. The USDA’s attaché in Brazil is forecasting 2021/22 soybean production in Brazil at 143.5 million tons on an increase in acreage and producers trying to meet demand. The office also revised 2020/21 production to a record 137 million tons following a boost in planted area. 2021/22 exports are pegged at 84 million tons, compared to 87 million for 2020/21, with domestic processing this marketing year at 46.5 million tons, rising to 47.7 million next marketing year. The USDA’s attaché in Malaysia estimates 2020/21 crude palm oil production at 18.7 million tons, down 8,000 from the last guess due to a lack of available labor, and sees 2021/22 at 16.85 million tons, a decline of 600,000 from the previous projection because of the price advantage of soybeans and slower imports by some of the nation’s biggest customers due to decreased demand.

Corn was sharply lower on fund and technical selling, with September 2021 through May 2022 closing limit down. Corn is also watching the weather, with the rain coming at a critical time for crop development. As of Sunday, 64% of U.S. corn is called good to excellent, unchanged from a week ago and 7% below a year ago, with 10% silking, compared to 14% on average. There will be a $.70 trading limit for corn Wednesday. Second crop harvest is 12% complete in Brazil, with CONAB’s new estimate out Thursday and the updated USDA projection due on the 12th. AgRural now has Brazil’s second crop at 54.6 million tons, down 5.4 million from the last guess due to planting delays, drought during development, and a recent frost. Corn export inspections were up on the month and the year, with 2020/21 well ahead of the 2019/20 pace. The leading destinations were China and Mexico. China is set to auction 123,954 tons of U.S. corn and 6,340 tons of Ukrainian corn from state reserves this week. Ethanol futures were unchanged.

The wheat complex was sharply lower on fund and technical selling. Parts of the spring wheat region got rain over the weekend, with a chance for more this week. For spring wheat, 16% of the crop is in good to excellent condition, a decrease of 4% from last week and 54% from last year, with 69% of the crop headed, compared to 62% on average. Rain will likely delay winter wheat harvest activity further in some areas, but Chicago and Kansas City were pressured by the drops in corn and Minneapolis. For winter wheat, 47% of the crop is rated good to excellent, 1% less than a week ago and 4% under a year ago, with 45% harvested, compared to 53% on average. Export inspections were down on the week and the year, with 2021/22 trailing 2020/21 about a month into the marketing year. The leading destinations were Mexico and Taiwan. DTN says Egypt purchased 180,000 tons of wheat from Romania and 60,000 tons from Russia, with Japan tendering for 108,175 tons of food wheat from the U.S., Australia, and/or Canada, Bangladesh in the market for a total of 100,000 tons of milling wheat, Iran looking for 60,000 tons of milling wheat, and Thailand tendering for 230,700 tons of feed wheat. Despite political tensions, China continues to buy wheat from Australia due to increasing demand for livestock feed usage.

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