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Corn continues to drift lower, soybeans bounce
Soybeans were modestly higher on short covering and technical buying, bouncing off the recent lows. It was an up and down session, but contracts are oversold and due for a bounce, and there was help from a higher move in bean oil. Development weather continues to largely favor the east over other growing areas. Given the better conditions in some areas than others, the trade is betting any stress will be balanced out and most of the region is expected to see a less stressful pattern starting next week. Soybean meal was mostly lower, adjusting spreads. If there’s a bright spot to the recent drop in price, it’s increased competitiveness on the export market, with the USDA’s weekly sales numbers out Thursday morning. China has favored Brazil recently, but an uptick in U.S. sales to “unknown destinations” could be a sign of improved interest in U.S. supplies.
Corn was lower on speculative and technical selling, with December closing below $4, the lowest finish for a December contract in nearly 4 years. Corn is watching the weather, with a chance for severe storms to go along with high heat in some areas. With most of the crop either in the late stages of or through the pollination phase, the big question is now acreage. The USDA will review survey data and factor in new information for the August 12th supply, demand, and production report for corn and several other crops. Some change is likely in that upcoming set of numbers and further revisions are possible in September and October. Unknown destinations bought 104,572 of new crop U.S. corn ahead of the open. U.S. Energy Information Administration says ethanol production last week averaged a record 1.109 million barrels a day, up 14,000 on the week and 42,000 on the year, while stocks hit a 10-week high at 23.973 million barrels, an increase of 250,000 from the previous week and 1.113 million from a year ago. The previous high-water mark for ethanol production was set during the week ending December 1st, 2017. Production continues to be driven by solid operating margins and good demand expectations. The Ukraine Grain Traders Association estimates that nation’s combined crop at 71.8 million tons, 2.8 less than the last guess due to heat and below the USDA’s most recent estimate.
The wheat complex was mixed, with Chicago up, Kansas City mostly firm, and Minneapolis down. Stateside, wheat continues to monitor the late winter wheat harvest and spring wheat development conditions. Spring wheat harvest activity is slower than normal, but it’s early. The same issues impacting spring wheat in the northern U.S. Plains are also having an effect in the Canadian Prairies. Still, the U.S. crop remains in much better shape than a year ago and the recent spring wheat tour did project a record yield. Globally, the trade is watching late development weather in the Black Sea region and slow harvest activity in parts of Europe. Harvest activity in France, Germany, and other parts of Russia has been slowed by rainfall, which is also lowering quality. Recent rainfall has boosted production prospects in parts of Australia, with StoneX projecting the crop at 30 million tons, compared to 26 million last year.
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