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Wheat hits new lows on slow demand

Soybeans were lower on fund and technical selling. The trade is preparing for the next round of talks with China, scheduled for late this week. The deadline for discussions in March 1st, but that could be pushed back, and the spread of African Swine Fever could limit demand. Brazil’s soybean harvest is ongoing, about 35% complete, with generally non-threatening to favorable conditions in most forecasts. U.S. beans are at a premium to those in Argentina and Brazil, and China has largely switched back to beans from Brazil for now. The trade is also wary about potential U.S. auto tariffs impacting European Union demand for U.S. beans. The E.U. has stepped up purchases of U.S. beans and meal during the tensions with China, but the overall pace remains much slower than last marketing year, because of those trade issues and increased competition from Brazil. The USDA’s weekly export inspections report did show about 400,000 tons of U.S. beans leaving U.S. ports last week, headed for China. Soybean meal and oil followed beans lower.

Corn was lower on fund and technical selling. Corn is also waiting for more trade negotiations with China while watching conditions in South America, especially planting weather for Brazil’s second crop. Conditions also look good in Argentina, which is on track for a record crop. The USDA’s Ag Outlook Forum later this week will give a partial preview of U.S. acreage expectations, with the official prospective planting report out in late March. There’s been more talk of China buying U.S. corn to replenish reserves, but nothing’s surfaced. China has also been linked to interest in U.S. DDGS, sorghum, and ethanol. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Thursday, delayed by Presidents’ Day. According to AgriCensus, South Korea bought around 855,000 tons of corn last week. The UDSA’s attaché for Ukraine estimates 2018 corn production at a record 35 million tons, pushing exports to 27.8 million.

The wheat complex was lower on commercial and technical selling, with March Kansas City notching a new contract low. Export demand continues to be slow, with prices from major competitors, including Russia and Ukraine, down from the recent highs. The USDA will issue six weeks of export numbers Friday, catching up after the 35-day government shutdown in late 2018/early 2019. The possibility of winterkill in parts of the Plains and Midwest seems to be a non-factor, even with the lowest planted area in 110 years. DTN says Ethiopia picked up 400,000 tons of optional origin wheat, Syria bought 200,000 tons of milling wheat from the Black Sea region, and Bangladesh purchased 50,000 tons of wheat, “likely” from Russia. France’s AgriMer says 85% of that nation’s soft wheat crop is in good to excellent condition, compared to 84% this time last year. The USDA’s attaché in Australia has 2018/19 wheat production at 17 million tons, the lowest since 2007/08 because of hot, dry weather during much of the growing season. Australia’s Bureau of Agricultural and Resource Economics has the crop at 17.3 million tons.

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