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Soybeans, corn supported by weather concerns

Soybeans were sharply higher on speculative and technical buying. August might be the critical month for beans, but the trade is already concerned about expanding drought in the Midwest and Plains. There’s scattered rain in the forecast, but that will have to actually materialize and it could miss some of the drier areas with a warmer pattern waiting in the wings. While U.S. export sales were up on the week, Brazil continues to control the market. The leading purchasers last week were Spain and unknown destinations for old crop and Mexico and Taiwan were the sold reported buyers for new crop. Unknown could be China when it’s time for delivery, but they’ve been nearly absent from the recent export inspections numbers. Soybean meal and oil were supported by the strength in beans. Bean oil had additional interest tied to renewable demand expectations and the higher trade in crude oil. The NOPA says member firms crushed 177.915 million bushels of soybeans in May, larger than expected, with soybean oil stocks down on the month. A tug strike at a major port in Argentina is reportedly impacting export movement. The Rosario Grain Exchange says Argentina’s soybean harvest is over, with a crop of 20.5 million tons, down 5% from the prior guess and considerably smaller than a year ago due to drought. China’s National Grain Trade Center says the first auction of imported soybeans this year will occur on the 20th with an offering of 315,000 tons produced in 2020.

Corn was sharply higher on speculative and technical buying. Nearly 90% of the Midwest is experiencing some form of drought, likely having some impact on early development. Some key corn growing areas of the Plains remain extremely dry as well. There’s already some demand rationing going on because of relatively high prices, so a solid U.S. production year will be needed to avoid driving up prices out of reach of end users. With just under a quarter remaining in 2022/23, U.S. corn sales are trailing 2022/21 and the USDA could cut the projection again in the next supply and demand update on July 12th. The main buyers for old crop U.S. corn last week were Japan and Mexico, with a big cancellation by unknown destinations, while Honduras and Canada were the listed new crop purchasers. France’s AgriMer says there are concerns about dry weather impacting spring planted crops, including corn. Citing dry weather in northern Europe, Strategie Grains sees 2023 European Union corn production at 61.2 million tons, down from the May guess, but still comfortably above the 2022 total.

The wheat complex was sharply higher on fund and technical buying. Rain in parts of the Plains this weekend is expected to delay harvest and could lower hard red winter quality even further. Soft red remains in comparatively good condition. Forecasts do have at least scattered rainfall in the near-term outlook for parts of the northern U.S. Plains. Demand for U.S. wheat continues to be stifled by relatively high prices, with most key competitors at a significant discount, especially Russia. Just two weeks into the 2023/24 marketing year, sales trail the slow 2022/23 pace. Last week’s big buyers were Mexico and Vietnam. Shipments out of the Black Sea region are reportedly slowing down due to the projected smaller crops in Russia and Ukraine this year, the escalating war between those two nations, and uncertainties about the survival of the Black Sea Grain Initiative. The Rosario Grain Exchange estimates 2023/24 wheat production for Argentina at 16.2 million tons, with planted area boosted by late May rainfall. Strategie Grains projects 2023 soft wheat production for the European Union at 128.7 million tons, a little bit less than a month ago, but still slightly more than a year ago.

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