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Soybeans follow through, but close below highs

Soybeans were higher on commercial and technical buying. Beans followed through on Friday’s post-USDA report gains but closed below the session’s highs on overbought signals. Still, there’s been a solid rally since the release of those numbers as the market’s focus shifts to demand rationing. The USDA’s cut in acreage and the lower-than-expected quarterly stocks are signaling a much tighter balance sheet. Soybeans are also monitoring development weather, with an eye on long-range outlooks ahead of August. The USDA says 50% of U.S. soybeans are in good to excellent condition, down 1% on the week, with 4% at the pod setting stage, compared to the five-year average of 2%. Soybean meal was mostly lower on bear spreading, while bean oil was supported by demand expectations. The USDA says May’s soybean crush was 189 million bushels, up 2 million on the month and 8 million on the year, with refined soybean oil and soybean meal production also higher. Soybean export inspections were above the previous week, but down from last year, continuing to reflect the slow demand, largely due to Brazil’s dominance of the market. The top destinations were Indonesia and Japan, with no significant shipments to China. The Rosario Grain Exchange says Argentina’s April/May soybean crush was the smallest in 15 years because of the smaller crop, which was heavily impacted by drought.

Corn was mixed. Corn had an up and down day in light pre-holiday trade, watching development weather. Dry parts of the Midwest did get rain over the weekend, but not a drought buster and there was storm damage in some areas. There is the potential for more rain this week in portions of the region. However, coverage and totals are highly uncertain. As of Sunday, 51% of U.S. corn is called good to excellent, up 1%, with 8% silking, compared to 9% on average. The USDA says 437.541 million bushels of corn were used for ethanol production in May, 6% higher than April, but 2% lower than May 2022, with DDGS production of 1,702,061 tons, an increase of 5% from the prior month, but a decrease of 10% from the previous year. Corn export inspections last week were mixed, up on the week, down on the year, primarily to Mexico and Japan. The USDA’s next round of supply and demand estimates is out July 12th. Corn is also monitoring the second crop harvest in Brazil. Markets are closed on Tuesday for Independence Day.

The wheat complex was mostly lower. Quarterly wheat stocks were lower than expected, but any upside will be limited by slow export demand. The market seems to be taking a “wait and see approach” to anything that happens between Russia and Ukraine involving the Black Sea Grain Initiative or world weather. Domestically, the northern Plains look warm and dry, possibly stressing spring wheat, while more winter wheat harvest delays are probable. For winter wheat, 37% of the crop is harvested, compared to 46% normally in early July, while 40% of the crop is in good to excellent shape, unchanged. For spring wheat, 48% is rated good to excellent, 2% lower, with 51% headed, compared to the usual rate of 46%. Wheat export inspections were up on the week and the year, mainly to Brazil and Japan. The Rosario Grain Exchange says new crop wheat sales are the slowest in seven years because of the uncertainties about planted area, low prices, and political questions. Reports from India say the recent monsoon covered wide areas, but totals were lower than average.

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