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Soybeans, corn extend weather rally

Soybeans were higher on speculative and technical buying, pulling contracts to a weekly gain. Forecasts have a return to hot, dry weather in much of the Midwest in the coming days. That’s during a key phase of soybean development and could cause stress and impact yields. The USDA’s next round of yield projections is out September 12th, which will include the results of an acreage resurvey in some states. Given the already tight nature of the U.S. balance sheet, any negative impact on yield would further restrict supplies and probably prompt at least some form of demand rationing. Economic issues in China are also a wildcard for demand. Soybean meal and oil followed beans higher, with additional support from the solid domestic crush margins. Soybeans are also monitoring pre-planting conditions in Brazil.

Corn was higher on speculative and technical buying, ensuring a higher finish for the week. That hot, dry weather pattern in the coming week is expected to cause at least some stress to corn in key U.S. growing areas. The USDA’s weekly crop progress and condition report is out at its normal time Monday, August 21st. Mexico bought 112,000 tons of new crop U.S. corn Friday morning. That came just a day after the U.S. announced the formation of a conflict resolution panel through the USMCA regarding Mexico’s ban on GMO corn imports. Corn is also monitoring the final third or so of the second crop corn harvest in Brazil. Rain is expected to delay activity in some areas, but it’s not expected to have a major impact on quality. The Buenos Aires Grain Exchange says 90% of Argentina’s corn crop is harvested, with the production estimate holding at 34 million tons. 2023/24 corn planting gets underway next month.

The wheat complex was higher on short covering and technical buying, but not enough to stave off a week-to-week decline for the most active contracts at the three U.S. pits. Wheat is oversold and U.S. supplies are projected at multi-year lows, with the potential for global supply numbers to get tighter. Weather is an issue in parts of Canada, Argentina, and Australia, and a big, rumored purchase of Russian wheat by India would have significant impact on global supply. Additionally, Chicago wheat is becoming more competitive on the export market, which would also affect supplies. However, any sustained upside will likely be limited by slow export demand, with Russia dominating the market. Russia has an overall price advantage and is still shipping grain actively, even as the war with Ukraine is ongoing. Ukraine is also still shipping grain, just at a lower rate, and Kyiv and its allies explore alternative routes to the Black Sea.

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