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Corn, wheat up as soybeans consolidate

Soybeans were narrowly mixed, mostly firm. It was an up and down day for beans, consolidating after the gains earlier in the week, with traders watching near-term rainfall chances for Argentina and Brazil. Those chances are generally mixed and depend on which forecasts are being monitored. For the most part, outlooks are calling for a slightly lower chance of rain in some areas against a greater chance in others. Either way, crops in South America are mostly in critical phases of development. The USDA’s next set of supply and demand estimates and CONAB’s updated outlook for Brazil are both out February 8th. Brazil’s harvest is just over 5% complete, with generally disappointing yields. Soybean meal was higher and bean oil was lower, adjusting spreads. China’s Ministry of Agricultural and Rural Affairs says 2023 domestic soybean production was a record 20.8 million tons, primarily due to an increase in planted area.

Corn was higher on short covering and technical buying. Corn continues to hang just above the recent contract lows, watching weather in South America. Conditions remain generally favorable in most of Argentina, while first crop harvest is ongoing in Brazil with second crop planting getting underway in some areas. Ethanol production dropped to a near three-year low last week as stocks hit an almost one-year high. The U.S. Energy Information Administration says ethanol production averaged 818,000 barrels a day, a drop of 236,000 on the week and 194,000 on the year due to weather and less favorable margins, with a domestic supply of 25.815 million barrels, a jump of 120,000 from a week ago and 738,000 from a year ago. Ethanol exports were also up from the previous week.

The wheat complex was higher on short covering and technical buying, along with lower trade in the dollar during the session. There’s more precipitation in the forecast for U.S. hard and soft red winter growing areas. Large swaths of the region had good snow cover during the recent cold snap, insulating crops from damage, with an extended shift to warmer temperatures on tap in much of the U.S. A global drop in prices has sparked new export demand, which could benefit the U.S., but that’s also dependent on the strength of the dollar. The USDA’s weekly sales numbers are out Thursday morning. Russia’s control of the global market isn’t just impacting the U.S. The European Union says soft wheat exports since the start of the marketing year July 1st were 17.4 million tons, compared to 18.8 million this time last year. The USDA’s attaché in Australia estimates 2023/24 wheat crop at 25.5 million tons, inline with the most recent official guess, and down from the record 2022/23 total of 40.545 million tons. Still, some private projections are larger due to a less impactful than expected El Nino pattern. Exports this marketing year are seen at 19 million tons, compared to 31.823 million last marketing year.

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