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Soybeans, Minneapolis wheat buy back some losses

Soybeans were higher on fund and technical buying, clawing back a little less than a third of Tuesday’s drop. Contracts were oversold and while the expected rain will help the crop, the supply is projected to remain historically tight through next marketing year, which doesn’t end until August 31st, 2022. A trend-line or better yield is critical, as it would help boost stocks, meet demand expectations, and limit further price inflation. 59% of the crop is rated good to excellent, one of the lowest ratings for this time of year in the last decade. It continues to largely be a tale of two crops, with last week’s declines in the state ratings cancelling out gains. Deliveries on July soybeans continue to be light. Soybean meal and oil followed beans higher. The trade is also monitoring conditions ahead of widespread planting in Brazil, with most projections pointing towards another increase in planted area.

Corn was mostly lower. Corn consolidated after Tuesday’s losses, watching weather and the potential for broad rain coverage this weekend. Sustained rain will be critical as the crop moves into and through key development phases, with 10% silking as of Sunday. Still, some of the most drought afflicted areas in the Midwest are expected to receive lesser amount than other portions of the region. Similar to soybeans, corn will need a trend-line or better yield to meet demand and is also set to see historically tight ending stocks through at least the end of the 2021/22 marketing year. Demand continues to be strong, with no deliveries reported against the July contract as of Wednesday morning. China is a question mark because of their increase in domestic production. Brazil’s second crop harvest is ongoing, with CONAB’s new estimate out Thursday. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Thursday, delayed a day by the observation of Independence Day. The weekly export sales report is out Friday morning.

The wheat complex was mixed. Minneapolis took back part of Tuesday’s losses, with just 16% of the U.S. spring wheat crop rated good to excellent, down 4% on the week, and 50% in poor to very poor shape. The damage has largely been done to spring wheat, but another broad round of rain would at least help to minimalize further yield losses. Chicago wheat was down, unable to follow through on some firmness, and Kansas City closed steady to firm. Harvest delays are expected to impact soft red winter more than hard red winter. The trade is also watching global development conditions, with the next set of USDA estimates out July 12th. DTN says Jordan bought 60,000 tons of milling wheat from an unknown seller, while Turkey is tendering for 440,000 tons of feed wheat and Algeria is in the market for 50,000 tons of milling wheat from an unspecified origin. There’s talk that feed mills in South Korea are currently favoring wheat over corn for feed use, but most of the reported purchases have been optional origin.

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