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Corn holds on as wheat falls, soybeans turn mixed

Soybeans were mostly lower on bull spreading. Contracts were up early on an oversold bounce, but mostly unable to follow through, with bean meal also selling off. Bean meal was down on talk China is cutting soybean meal use, profit taking, and spread adjustments with soybean oil. That spread trade and the higher crude oil supported bean oil. Export demand has slowed due to Brazil’s record crop and U.S. planting weather looks mostly favorable. Parts of the eastern and central Midwest could see a drier pattern into mid-June, potentially causing some stress, but portions of the southern Plains will see at least some rain. If the weekly export numbers are even slightly decent, soybeans could rally, but absent anything firm about stress or damage, there isn’t a lot of fundamental support in the soybean market right now, aside from tight near-term supplies. The big test for the crop will be precipitation in August.

Corn was higher on short covering and technical buying. Corn is watching conditions both in the U.S. and for the second crop in Brazil. For now, projections are calling for record crops in both the U.S. and Brazil. The USDA’s next round of supply and demand estimates is out June 9th, with CONAB’s updated outlook for Brazil set for June 13th. The U.S. Energy Information Administration says ethanol stocks fell to a more than six-month low last week at 22.041 million barrels, a drop of 1.15 million on the week and 1.671 million on the year because of lower production and preparations for summer driving season, while production averaged 983,000 barrels a day, a decline of 4,000 from the prior week and 27,000 from a year ago. China is reportedly cutting corn and soybean meal feed use in favor of domestic wheat. That could be part of the reason for the recent old crop U.S. cancellations by China, not just Beijing attempting to purchase to buy cheaper corn from Brazil, with harvest starting in a couple of weeks. Either way, the USDA will likely lower its U.S. corn export projection in the next round of supply and demand numbers.

The wheat complex was sharply lower on profit taking and technical selling, along with the higher trade in the dollar. Rain in the southern Plains is too late to help and could harm quality during early harvest activity. There’s also some rain in the forecast for parts of the northern Plains, which would further push back spring wheat planting. The complex ignored any bullishness attached to those issues Wednesday, focusing on demand. Russia continues to dominate the export market due to cheap prices. The USDA’s weekly sales numbers are out Thursday morning. There are about two reporting weeks left in the current marketing year for wheat. Mills in the southeastern U.S. are importing wheat from other nations due to tight local supplies.

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