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Wheat drops, pulling corn lower

Soybeans were mixed on spread trade and profit taking. Beans consolidated, monitoring conditions in South America, soybean product demand, and global vegetable oils. There was no USDA soybean export sale announcement for the first time this month, but unknown destinations did buy 20,000 tons of 2021/22 U.S. soybean oil. That could be linked to the slowdown in exports from the Black Sea region, both Russia and Ukraine are significant exporters of sunflower oil, in addition to Indonesia’s decision to further curb palm oil exports. The USDA lowered U.S. ending stocks on increased exports and cut production estimates for Argentina, Brazil, and Paraguay. The 2021/22 average farm price is now estimated at $13.25 per bushel, compared to $13 in February and $10.80 for 2020/21. World soybean stocks fell below 90 million tons and production was slashed by just over 10 million tons, with the production decline due to the reduced expectations for South America. South American export projections were also lower and China’s imports were down 3 million on the month to 94 million tons. The USDA did leave Argentina’s crush estimate unchanged, but lowered Brazil and Paraguay. Soybean meal was higher on commercial support and bean oil was lower on profit taking, despite the issues facing the global vegetable oil market. The USDA left U.S. soybean product ending stocks unchanged but did raise the price projections.

Corn was lower on profit taking and technical selling. Corn saw spillover pressure from the drops in wheat and crude oil, while also watching weather in South America and conditions ahead of widespread U.S. planting. CONAB’s updated outlook for Brazil is scheduled for Thursday and the USDA’s prospective planting report is out March 31st, along with quarterly grain stocks. U.S. ending stocks were down 100 million bushels on the month at 1.44 billion due to higher ethanol and export demand. The average estimated farm price is now $5.65 per bushels, compared to $5.45 a month ago and $4.53 in the prior marketing year. Global corn stocks were down from February, while production was up. The USDA did lower the projection for Argentina’s corn crop, also cutting expectations for South Africa, Ukraine, and the European Union, leaving Brazil unchanged, and bumping Russia up modestly. South American exports were steady and Ukraine was down due to the near total halt of sales in the Black Sea region. Ethanol futures were unchanged. The U.S. Energy Information Administration says ethanol production last week averaged 1.028 million barrels a day, up 31,000 on the week and 90,000 on the year, with stocks of 25.271 million barrels, an increase of 338,000 from the previous week and 3.201 million from a year ago. Colombia bought 100,000 tons of 2021/22 U.S. corn. The USDA’s weekly sales numbers are out Thursday morning.

The wheat complex was sharply lower on profit taking and technical selling, with several contracts limit down, $.85 for Chicago and Kansas City, and $.60 for Minneapolis. Russia’s invasion of Ukraine is ongoing, but there are concerns about demand at these price levels. U.S. ending stocks were up 5 million bushels on the month to 653 million, with lower exports canceling out lower imports. The USDA did raise the average estimated farm price $.20 to $7.50, which would be $2.45 higher than last marketing year. Globally, ending stocks and production were modestly higher, with increased production outlooks for Australia, the European Union, and India canceling out a slight decrease for Russia. The USDA did lower export outlooks for Russia and Ukraine due to that invasion. There are also a lot of questions about Ukraine’s winter wheat harvest and spring wheat planting. The USDA says the report reflects their initial assessment of short-term impacts from Russia’s invasion of Ukraine, but longer-term outlooks are uncertain. The trade is also monitoring U.S. winter wheat development weather, with drought or near drought expectation to limit yield potential in much of the U.S. Plains.

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