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Wheat complex sees strong rally

Soybeans were higher on short covering and technical buying. Beans rallied after being mixed to lower for most of the session, waiting for the Federal Reserve announcement on interest rates. As expected, the Fed raised the key rate another quarter of a point, the tenth rise in a row, but that’s expected to be the last increase for a while. Export demand is slow because of Brazil’s record crop and U.S. planting is ahead of average. In Brazil, with harvest nearly over, the basis has started to rebound, which could help export demand for U.S. wheat. Soybean meal was down on demand concerns, while bean oil was able to find short covering support, helping it shrug off a drop in crude oil ahead of that Fed announcement. The USDA’s weekly export sales numbers are out Thursday morning.

Corn was higher on short covering and technical buying. Corn is watching planting and development weather, expecting generally good near-term conditions in most of the region. Second crop conditions in Brazil are favorable with some rain in the forecast in the next few weeks. CONAB’s next outlook for Brazil’s crops is scheduled for Thursday, May 11th, with the USDA’s updated supply and demand numbers out the following day. Corn did see some pressure from the drop in crude oil but moved higher after wheat rallied. The U.S. Energy Information Administration says ethanol production last week averaged 976,000 barrels a day, up 9,000 on the week and 7,000 on the year, as stocks fell to a 21-week low at 23.363 million barrels, a decline of 943,000 from the prior week and 524,000 from a year ago.

The wheat complex was sharply higher on short covering and technical buying, along with the mostly lower trade in the dollar during the session. Wheat is heavily oversold after the move to two-year lows earlier this week, which has uncovered some new buying interest. U.S. soft red winter prices are competitive, which could help exports, and hard red winter is in dismal shape, primarily due to drought in the southern Plains. Estimates from a crop tour in Oklahoma point to the smallest crop in about a decade, while one private projection says it could be the smallest crop in more than half a century. There’s some rain in the forecast for the Plains, but it’s too late to help in parts of the region. Other winter wheat tours are scheduled to get underway this month. Further north, while spring wheat planting weather is expected to improve, it’s quite a bit behind normal. The trade is also watching the early spring wheat planting pace in Canada. Globally, part of the support was tied on what Russia claims was an attempted drone strike on the Kremlin by Ukraine. Kyiv has denied it’s responsible for the attempt. Negotiations on an extension of the Black Sea Grain Initiative were expected to occur this week.

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