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Soybeans up on good export demand

Soybeans were modestly higher on short covering and technical buying. The Census Bureau’s export numbers for November were strong, with sales at a two-year high for the month at 257 million bushels. That’s partially because of strong demand from China, but also partially because of seasonal factors for South America. The USDA’s weekly numbers are out Friday morning, delayed by weather issues in Washington D.C. Tuesday. With early harvest underway in Brazil, their prices are at a discount to U.S. prices. Parts of South America are dry, but forecasts generally have rain in most of those areas, with better coverage expected in Brazil than Argentina. Brazil’s equivalent of the USDA, CONAB, has the crop at 122.225 million tons, compared to the previous guess of 121.092 million and the year ago total of 115.03 million tons. The USDA’s attaché in Argentina has soybeans at 53 million tons, with 79% of the crop planted and reportedly in good condition. The USDA is expected to reduce its 2019 production estimate for U.S. beans Friday. Soybean meal was higher and bean oil was lower on product spread adjustments.

Corn was narrowly mixed. Export demand for U.S. corn continues to be slow, largely because of competition from South America and Ukraine. The U.S. Census Bureau says November 2019 U.S. corn export sales were 97 million bushels, a steep drop from November 2018. The USDA says unknown destinations bought 207,000 tons of 2020/21 U.S. corn Wednesday morning. Corn is waiting for the USMCA to go in front of the full U.S. Senate, but that might wait until after the impeachment vote. The USDA is expected to lower production, export, and ethanol use estimates Friday. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production last week averaged 1.062 million barrels a day, down 4,000 on the week, while stocks hit a multi-month high at 22.462 million barrels, an increase of 1.428 million from the week before. The USDA’s new corn for ethanol use estimate is also out Friday. China is reportedly suspending the plan to mandate a 10% ethanol blend this year. CONAB has Brazil’s total corn crop at 98.711 million tons, up from the previous projection but down on the year, with the first crop at 26.617 million and the second crop at 70.936 million tons. Brazil’s second crop is the source of most of their exports.

The wheat complex was modestly higher on short covering and technical buying. Wheat is getting ready for the USDA’s new supply, demand, and production estimates out Friday. The report is expected to show lower than a year ago planted area for winter wheat and a record world supply at the end of the 2019/20 marketing year, which runs through the end of May. Revisions are probable for some key export nations, but the USDA is also expected to project a large overall global crop. Conditions for most of Russia look good and while most of Ukraine’s winter crops are in good shape right now, a change in the weather could harm later planted wheat. APK-Inform projects Ukraine’s winter grain crop total at 74 million tons, compared to 70 million the previous year. DTN says Japan is tendering for 120,000 tons of feed wheat, along with their tender for 106,215 tons of food wheat, while Egypt is in the market for 55,000 to 60,000 tons of wheat in one tender, including the U.S., and 60,000 tons in an optional origin tender. The complex is waiting to see what impact, if any, there is on U.S. exports from a higher export tax in Argentina. Tensions in the Middle East did pressure commodities overnight, but that pressure eased once the normal session got underway.

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