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Wheat gains on planting questions, Black Sea uncertainties

Soybeans were mostly lower on spread trade and profit taking. Beans are continuing to watch early harvest activity and early planting in South America, along with product demand. Export sales were down on the week, but with good numbers for Egypt and China against a cancellation by unknown destinations. Overall, 2022/23 sales are still ahead of the 2021/22 pace, but shipments have been less than what’s needed to meet USDA projections. The recent strength in the dollar, continued competition from South America, especially Argentina, and that week’s uncertainties about a railroad strike likely contributed to the disappointing weekly total. Soybean meal was lower and bean oil was higher on the adjustment of product spreads. The Rosario Grain Exchange sees Argentina’s 2022/23 soybean production at 48 million tons, up 1 million from the last guess due to expectations some producers will switch from corn. The International Grains Council estimates 2022/23 world soybean production at 387 million tons, down 2 million from the July report, but up sharply from 2021/22 on anticipated year-to-year increases in South America.

Corn was modestly higher on short covering and technical buying. There is some scattered rain in parts of the Midwest and Plains, but early harvest conditions generally look good. It’s still a little early for anecdotal yields, with the USDA’s next round of production projections out October 12th. Weekly sales were bearish, Japan and Egypt topped the list, but Mexico and unknown destinations bought U.S. corn Thursday morning, 105,000 and 101,600 tons, respectively. It is early, but the 2022/23 pace is way behind 2021/22, partially because of slower demand from China and the hefty competition from Ukraine and Brazil. That’s in addition to the recent strength in the U.S. dollar against other currencies. Ukraine’s State Customs Service says corn exports for the marketing year to date are 4 million tons, compared to 1.4 million this time last year. The Rosario Grain Exchange estimates Argentina’s 2022/23 corn crop at 56 million tons, down 2 million from the last guess due to drought. The International Grains Council projects 2022/23 world corn production at 1.168 billion tons, under last month and last year, due in part to a smaller guess for the U.S.

The wheat complex was higher on commercial and technical buying. Wheat is watching drought potentially limit U.S. winter wheat planting in the southern and southwestern U.S. Plains, while waiting for developments in the Black Sea region. Russia is expected to take more action in Ukraine, impacting exports and planting, and Moscow is unlikely to extend Ukraine’s Black Sea export corridor past November 22nd. Ukraine’s State Customs Service says wheat exports since the start of the marketing year are 2.3 million tons, 68% slower than the year ago pace. Russia’s wheat exports are also slower, impacted by sanctions following their invasion of Ukraine in February. SovEcon raised its production estimate for Russia yet again, now pegged at 100 million tons following better than expected spring wheat yields. The International Grains Council projects global 2022/23 wheat at 792 million tons, compared to 778 million, due to increases for Russia, Australia, and Canada. Weekly U.S. wheat sales fell sharply from the prior week, with Indonesia and China leading the way, but with a cancellation by unknown destinations. Early in the second quarter of 2022/23, the U.S. sales pace is just behind 2021/22. U.S. wheat sales continue to suffer from the strength in the dollar and high prices relative to export competitors. The Rosario Grain Exchange sees Argentina’s 2022/23 wheat crop at 16.5 million tons, 1.2 million less than the prior projection due to an extended period of drought.

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