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Soybeans, meal take lead on Argentina forecasts

Soybeans were higher on speculative and technical buying. Rain was good in parts of Argentina over the weekend, but the extended outlook over the next two weeks is mostly dry, likely limiting production potential. Conditions in most of Brazil look good with harvest activity ongoing, albeit with some delays in central and western areas due to rain. There are some concerns about yields in dry portions of southern Brazil, but that will likely be canceled out by better numbers in other key growing areas. CONAB’s next assessment of Brazil’s crops is out February 9th. Soybean meal was up sharply, with March establishing a fresh contract high, and bean oil gained on those Argentine crop concerns. Argentina is the world’s largest exporter of soybean products. Soybean export inspections were up on the week and the year, more than what’s needed to meet projections, mainly to China and Indonesia.

Corn was higher on speculative and technical buying. Corn is watching weather in South America, with forecasts for Argentina dry into mid-February, against non-threatening conditions in most of Brazil. Japan bought 112,000 tons of U.S. corn for delivery this marketing year. Export demand for U.S. corn remains slower than a year ago, but the window is expected to open wider in the coming weeks as Brazil exhausts old crop supplies and Argentina has a better idea of production versus domestic needs. Additionally, while Ukraine is still shipping grain at much lower prices than the U.S., the pace has been reduced by slower Russian inspections. Corn export inspections were under last week and last year, primarily to Mexico and China. There’s a strong chance the USDA could cut its corn export outlook in the next supply and demand report on February 8th. Ethanol demand is also slow, but the national basis remains strong.

The wheat complex was mostly higher, with Chicago following Kansas City and Minneapolis steady to firm. Kansas City was supported by the chance for winterkill this week in parts of the Plains, as some areas have little to no snow cover. Still, winter wheat is a notoriously resilient crop and temperatures are expected to warm-up at midweek. Drought conditions have eased in the Plains, but most of the region remains drier than normal. Export demand for U.S. wheat continues to be slow, with Russia holding most of the market due to a price advantage. Russia’s attacks on Ukraine are ongoing, impairing Ukraine’s new crop production prospects and Russian inspectors of Ukraine’s export vessels under the Black Sea Grain Initiative are reportedly delaying shipments. Weekly U.S. wheat inspections were above the prior week and a year ago, with Japan and Mexico topping the list, but nearing the start of the fourth quarter of 2022/23, the pace remains behind 2021/22. A bright spot for U.S. wheat is talk of increased feed wheat demand.

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