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Soybeans, meal extend gains, with corn, wheat higher

Soybeans were higher on commercial and technical buying. Soybeans saw follow through support tied to the contract highs in meal. That’s partially because of concerns about Argentina’s crop, with more hot, dry weather in the forecast. Argentina’s typically the world’s largest exporter of soybean products. The Buenos Aires Grain Exchange says 37.1% of Argentina’s soybean crop is planted, well behind the year ago pace due to weather. Conditions are comparatively much better in Brazil. CONAB’s next projection for Brazil is out Thursday, with the USDA’s updated supply and demand numbers scheduled for Friday. Soybean meal also benefited from another round of aggressive spread unwinding with soybean oil. China’s relaxation of zero-COVID policies is viewed as supportive for soybean export demand. Customs data from China did show a 14% year to year decline in November soybean imports by the world’s largest buyer, but that’s mostly tied to high prices and U.S. logistics issues, but those policies played at least some role. The USDA’s attaché in Indonesia estimates 2022/23 palm oil production at 44.7 million tons, down from the previous guess due to crop loss during export restrictions and lower fertilizer application rates. The office did raise the industrial palm oil use projection linked to global biodiesel production. 2022/23 palm oil exports from Indonesia are seen at 29 million tons, compared to 2021/22’s total of 22.3 million tons, which was a drop of 17% from 2020/21 due to the government’s export policy. The USDA’s weekly sales numbers are out Thursday morning.

Corn was modestly higher on fund and technical buying, along with a lower move in the dollar. Contracts were oversold and due for a bounce, monitoring weather conditions in South America. Weather is largely beneficial for most of Brazil, while production estimates for Argentina are falling. The Buenos Aires Grain Exchange says 32.7% of Argentina’s corn crop is planted, about 5% behind the year ago pace due to weather. Brazil’s state of Rio Grande do Sul is dry, but with some rain on the way, while most of Argentina is expected to see a hot, dry pattern into mid-month. The big story for Brazil will be the performance of their third crop, which is planted after soybeans are harvested. The U.S. Energy Information Administration says ethanol production last week averaged 1.077 million barrels a day, the highest average since late last year and up 59,000 on the week, but down 13,000 on the year, with stocks of 23.257 million barrels, a 36-week high and a jump of 323,000 from the previous week and 2.793 million from a year ago. Margins have fallen into the red for some producers.

The wheat complex was higher on fund and technical buying. Wheat was heavily oversold and the dollar was down during the session, but the fundamental outlook continues to be neutral to bearish. That’s due to slow export demand caused by relatively high prices, even as world supplies tighten. The Buenos Aires Grain Exchange says 42.1% of Argentina’s wheat crop is harvested. The trade is also watching harvest activity in Australia. It’s going to be a record large crop, but with poorer quality due to heavy rainfall ahead of and during harvest. That might open up export opportunities for higher protein U.S. wheats in Asia. The recent drop in price has made Chicago wheat more competitive, but it still sits at a premium to Russia. Russian exports have been moving out quickly because of that price advantage. Russia’s Ag Ministry says that nation has harvested 105.3 million tons of wheat. Exports out of Ukraine have been lessened by slower Russian inspections of outgoing vessels.

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