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More red ink for soybeans, corn, wheat

Soybeans were lower on fund and technical selling. Brazil’s harvest is more than 30% complete, slower than average, but still already about 50 million tons. The record crop in Brazil should cancel out the production losses due to drought in Argentina. South America is expected to produce a combined crop of around 5 billion bushels. That’s already cutting into export demand for U.S. soybeans. Sales have slowed down, but there are relatively few unshipped bushels, which might lessen cancellations. Export inspections were down on the week and the year, but the 2022/23 pace remains ahead of 2021/22 heading into the back half of the marketing year. Last week’s top destinations were China and Mexico. The trade is also monitoring U.S. conditions ahead of widespread planting. Soybean meal was higher and bean oil was lower on the adjustment of product spreads.

Corn was lower on fund and technical selling. Corn was watching the good second crop planting progress in Brazil against the forecasts calling for more hot, dry weather in Argentina. Part of Brazil’s key second crop might be planted after the optimal period, but most guesses are still well above 95 million tons, significantly larger than last year, hitting the global market this summer. CONAB’s updated outlook for Brazil’s crops is scheduled for March 9th. The window is opening for U.S. exports, but it’ll take strong sales to make up for earlier pace, largely because of slower demand from China. Export inspections were down from the previous week and a year ago, mainly to Mexico and Colombia. The USDA could lower its export projection in the next round of supply and demand estimates, out March 8th.

The wheat complex was lower on fund and technical selling. Any concerns about further damage to the hard red winter crop from this week’s storms in the Plains are on the back burner due to some areas receiving beneficial precipitation. Still, that likely damage is on top of continued drought in parts of the region and winterkill concerns. Soft red winter conditions are comparatively better and the trade is also watching weather ahead of spring wheat planting in the northern U.S. Plains and Canada. Russia, Ukraine, and Australia continue to control the export market. Wheat inspections last week were above the prior week, but below a year ago, primarily to Japan and South Korea. Heading into the final quarter of 2022/23, the pace is just ahead of 2021/22 and in-line with what’s needed to meet USDA projections. There are questions about the extension of the Black Sea Grain Initiative with less than a month remaining until the expiration of the current version of the agreement.

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