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Strong end to the week for soybean futures

Soybeans were sharply higher on commercial and technical buying, notching new contract highs and building on the week’s earlier gains. Recent rainfall has stabilized soybeans somewhat in Argentina, but coverage in southern Brazil and Paraguay was relatively spotty. The Buenos Aires Grain Exchange says 38% of Argentina’s crop is in good to excellent condition, up 8% on the week, while 19% is called poor to very poor, down 8%. Several private and governmental agencies have lowered production estimates for Brazil, with the most recent guess from ABIOVE at 135.8 million tons, 4.2 million under the USDA’s most recent outlook. Friday morning, unknown destinations bought 251,500 tons of U.S. soybeans and Mexico picked up 141,514 tons, both for 2021/22 delivery, while China purchased 264,000 tons of new crop U.S. beans. The bump in U.S. soybean sales might be linked to the recent reductions in South American production projections. Soybean meal and oil were supported by commercial demand.

Corn was higher on commercial and technical buying, cementing a solidly higher weekly finish. Corn is also watching conditions in South America, with hot, dry weather in the forecast for the coming week. It’s roughly the equivalent of late July or early August for those key South American growing areas. The big question for South America will be the performance of Brazil’s second crop, the largest of the three and the source of most of that nation’s exports, which is planted after soybeans are harvested. The USDA’s attaché in Argentina estimates 2021/22 corn production at 51 million tons with exports at 36 million, both 3 million less than the USDA’s most recent guesses. The Buenos Aires Grain Exchange says 32% of Argentine corn is in good to excellent condition 10% above a week ago, with 28% rated poor to very poor, 9% below the prior rating. The USDA’s next set of production projections is out February 9th and CONAB’s updated outlook for Brazil is scheduled for the 10th. Ethanol futures were unchanged.

The wheat complex was higher on commercial and technical buying, with Chicago and Kansas City up on the week, against week-to-week losses for the most active months in Minneapolis. Tensions in the Black Sea region eased a little late in the week, but remain a concern, and could still impact exports out of the region. The European Union would probably pick up part of that business, but French wheat would have to become more competitive to really fill the void. Algeria, normally a big customer of France, has recently shifted towards Russian and Ukrainian wheat because of price. Importers are also watching Russia’s sliding export tax scheme and waiting for Moscow’s cap on sales to start February 15th. Drought conditions continue to be an issue in a fairly wide portion of the U.S. Plains. That’s impacting winter wheat condition ratings and, if it persists, will likely have an impact on spring wheat acreage in the northern and northwestern U.S. Plains into the Canadian Prairies. The USDA’s attaché in Argentina says 2021/22 wheat production was a record large 21.8 million tons, compared to the official estimate of 20.5 million and the 2020/21 total of 17.645 million tons. Exports this marketing year are seen at 15.2 million tons, compared to 13.5 million earlier in the month and 11.531 million last marketing year.

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