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Soybeans surge, corn, wheat fall back late in day

Soybeans were higher on fund and technical buying, closing towards the upper end of the day’s range. That weekend rain in Argentina was beneficial, but long-term forecasts remain mostly dry. Aside from dry conditions in some southern growing areas, Brazil generally looks good and seems to be on track for a record crop. The big recent bright spot for the soybean industry in Argentina has been Buenos Aires “soy dollar” program, implementing a favorable exchange rate for the crop and sparking sales. Since the reintroduction of the program November 28th, nearly 3 million tons of Argentine soybeans have been sold, with this phase running until December 30th. The USDA says unknown destinations bought 140,000 tons of 2023/24 U.S. soybeans ahead of the open. That could turn out to be China, but it’s about nine months until delivery for those soybeans starts and that sale could be canceled in the intervening period. Soybean meal closed mixed, mostly higher, on bull spreading and oversold signals after Monday’s drop, while bean oil saw a second consecutive higher finish, with help from crude oil. U.S. crush margins remain strongly in positive territory.

Corn was mixed, mostly modestly lower, unable to hold onto the session’s gains after running into overhead resistance. Corn is watching weather in South America, with dry conditions in Argentina and only scattered rain in southern Brazil. Estimates for Argentina’s crop have been trending lower with uncertainties about total planted area, while the big test for Brazil’s corn production will be the performance of the second crop. Export demand is slow with competition from Brazil and Ukraine. The export window for corn does open a little bit more later this winter. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday. Production two weeks ago was the highest in nearly a year, but margins have gotten tighter and there are uncertainties about sustained ethanol demand. The USDA’s attaché in Ukraine lowered its production outlook to 23.1 million tons with about 40% of the 2022 crop remaining in the field. 2022/23 corn exports by Ukraine are projected at 20.2 million tons, compared to the most recent WASDE guess of 17.5 million and the 2021/22 total of 27.336 million tons.

The wheat complex was mixed, with Chicago seeing some profit taking and Kansas City and Minneapolis backing off from the session highs late in the session. The big focus continues to be potential export disruptions for Ukraine caused by Russian attacks. Most of Monday’s gains were tied to uncertainties about Ukraine’s key port in Odesa following a weekend drone strike by Russia, but APK-Inform reported Tuesday that vessels were once again leaving that port, with more loading. The USDA’s attaché in Ukraine sees 2022/23 wheat exports at 15.1 million tons, compared to the official guess of 12.5 million and the 2021/22 total of 18.842 million tons, with production this marketing year expected to fall short of 19.9 million tons, compared to 33.007 million last marketing year. The office does not extend the Black Sea Grain Initiative to be extended past the end of March 2023. Russia continues to hold most of the wheat export market, benefitting from record production and the relative weakness of the ruble. Precipitation in the Plains will help U.S. hard red winter wheat, but longer-term outlooks are dry, which will be reflected in conditions when the crop emerges next spring. That precipitation is expected to move through the Midwest as well and while soft red winter conditions are comparatively better, they are not ideal, with drought conditions in some of the western portions of that growing region.

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