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Soybeans finish firm, but below day’s highs

Soybeans were modestly higher on short covering and technical buying as traders returned from the midweek break to ring in 2020. Beans want to extend their more than month-long rally on optimism about the trade deal with China. President Trump says phase one of the agreement will be signed January 15th in Washington D.C. China’s Ministry of Customs says it bought 2.6 million tons of U.S. soybeans during November, the most in a month in nearly two years. Crop conditions look good for most of Argentina and Brazil, pulling contracts down from the session highs. Harvest is underway in parts of Brazil, ahead of schedule. The USDA’s weekly export sales report is out Friday morning. Soybean meal and oil followed beans higher. Oil picked up additional support from strength in palm oil and India lowering taxes on palm oil imports. The USDA says the domestic soybean crush during November was 175 million bushels, compared to 187 million in October and 178 million for November 2018.

Corn was modestly higher on short covering and technical buying. Corn is also expected to benefit from the deal with China and is also watching weather in South America. New USDA supply, demand, and production numbers are out on the 10th. The USDA’s 2019 production total will be watched closely following the difficult growing season and widespread harvest delays experienced by many producers. Export and ethanol use projections are also question marks headed into the report. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Friday. China is also reportedly interested in U.S. DDGS, ethanol, and sorghum. According to the USDA, corn for ethanol use in November was 456.66 million bushels, up 5% on the month and less than 1% on the year, with DDGS production at 1.8 million tons, 3% higher than the previous month, but 3% lower than last year.

The wheat complex was mixed, with Chicago up, Kansas City fractionally mixed, and Minneapolis down. Export demand is better than expected, especially for higher quality varieties but the USDA does project a record global supply at the end of the marketing year. The 2019/20 marketing year runs through the end of May 2020. Also, U.S. soft red winter, the type traded in Chicago, is currently the most expensive on the global market. Contracts are overbought and could see a larger correction soon. Still, that might depend on how the January 10th WASDE numbers turn out, especially and if China does start to buy U.S. wheat in earnest. DTN says Turkey is tendering for 550,000 tons of milling wheat and 100,000 tons of durum. Egypt’s Ag Ministry says it expects 1.26 million hectares of wheat to be planted by this weekend, close to the target number with Cairo making efforts to increase planted area substantially to better meet domestic needs. Egypt is the world’s largest importer of wheat, primarily for the government’s subsidized bread plan.

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