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Soybeans, corn eke out firm finish as wheat drifts lower

Soybeans closed modestly higher on short covering and technical buying, also ending the week with modest gains. Export sales were down on the week, but the overall pace is still slightly ahead of last marketing year, nearing the end of the first quarter. The leading buyers were China and the Netherlands with a significant cancellation by unknown destinations. Weather conditions in South America continue to generally favor Brazil over Argentina. That said – there are concerns about a drier pattern in southern Brazil. A farmer survey by DATAGRO Grains confirms record planted area in Brazil, which likely spells more export competition for the U.S. in the next few months, after the narrow window favoring U.S. prices over Brazil closes. Of course, that’s moot if China’s COVID cases continue to rise and Beijing furthers its zero-COVID policy. The Buenos Aires Grain Exchange says planting in Argentina continues to see big delays due to drought, with just over 19% of the crop planted, less than half of this time last year. Argentina’s government is expected to announce a new “soy dollar” program Monday to spark sales with many farmers holding back because of new crop uncertainties. Soybean meal and oil were lower on profit taking, despite bullish crush margins.

Corn was modestly higher on short covering and technical buying, ensuring a firm weekly finish. Corn export sales were up on the week, even as the cumulative pace remains well behind a year ago. Mexico purchased the bulk of the week’s total, followed distantly by Saudi Arabia. There were also solid new crop sales, all to Mexico. A smaller, lower quality crop in Argentina could help boost U.S. sales in the coming weeks, and a big chunk of Ukraine’s corn crop might be left in the field due to weather and further aggression by Russia. Still, the major question mark for U.S. corn exports is the performance of Brazil’s second crop, which is planted after soybeans are harvested. The Buenos Aires Grain Exchange says less than 25% of Argentina’s corn crop is harvested, slower than the year ago pace.

The wheat complex was lower on fund and technical selling, cementing a lower close for the week. Contracts tried to move higher early but couldn’t follow through with a neutral to bearish fundamental outlook. Export sales showed improvement, but nearing the half way point of the marketing year, 2022/23 continues to trail 2021/22. Last week’s big buyers were Iraq and the Philippines. Ukraine’s Black Sea export pace has slowed down, with Kyiv blaming slow inspections by Russia. The Black Sea grain export agreement was recently extended through March 2023. While precipitation is in the forecast for the U.S. Plains, it could miss some of the drier areas. The big test will be conditions when the crop emerges from dormancy next spring. The Buenos Aires Grain Exchange has Argentina’s 2022/23 wheat crop at 12.4 million tons, significantly below the post-planting update due to drought and a late frost. The trade is also monitoring quality in Australia following heavy late season rainfall in some key growing areas. Planted area is up sharply in India as producers try to take advantage of record domestic prices. Egypt reportedly bought 175,000 tons of Black Sea origin wheat.

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