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Wheat gains on world crop concerns

Soybeans were modestly lower on profit taking and technical selling. Export demand continues to be slower than expected, especially from China, even with the U.S. discount to Brazil. The political tensions over several subjects between the U.S. and China are playing a significant role in trade. Brazil’s ANEC raised its’ estimate for that nation’s July soybean exports by about 750,000 tons to nearly 8 million tons. The USDA’s weekly export sales numbers are out Thursday, while updated supply, demand, and production estimates are due Friday. That bearishness is partly canceled out by concerns about damage from hot temperatures during key stages of development, but August is usually a more critical month for soybeans than July. Soybean meal and oil followed beans lower.

Corn was modestly higher on short covering and technical buying. Corn is also watching the weather, with above normal temperatures and only scattered rain expected in parts of the region this week. With the lower than expected acreage, a record corn crop was already unlikely, current weather conditions further trim that chance. There is also the potential for drought in corn growing areas of China. Ethanol production was up 14,000 barrels on the week at an average of 914,000 barrels a day, while stocks were higher for the first time in nearly three months at 20.620 million barrels but remain well below a year ago. Ethanol futures were modestly higher. Ethanol margins are now in the black in some areas on the somewhat improved demand. Brazil’s ANEC now has July corn exports for that nation at 5.16 million tons, compared to the prior projection of 3.9 million.

The wheat complex was higher, with most months up sharply, on speculative and technical buying. The trade is keeping an eye on harvest results from some key export competitors, including the European Union, Russia, and Ukraine. IKAR has Russia’s wheat crop at 78 million tons, down 1.5 million from the previous guess, and France’s ag ministry sees soft wheat production at 31.31 million tons, compared to 39.55 million a year ago. Recent rain has helped ease dry conditions in parts of the U.S. spring wheat growing region, while winter wheat harvest weather generally looks good. Canada grain trading firm G3 Global Holdings has opened a grain terminal in Vancouver, British Columbia, Canada to better reach customers in Asia, especially China. Egypt bought 230,000 tons of wheat from Russia and Jordan purchased 60,000 tons of wheat from an unspecified seller, while Thailand is tendering for 193,000 tons of feed wheat. Russia and Ukraine both have a significant price advantage over most other exporters, including the U.S. According to reports, Argentina’s Ag Ministry reference price for free on-board wheat are higher than they should be, limiting sales and leading exporters to think the federal government is manipulating prices.

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