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Soybeans end strong week with more gains

Soybeans were higher on fund and technical buying, capping off a week of strong gains after Thursday’s pause, with March hitting multi-year highs. Traders continued to watch weather in South America, with further reductions in yield estimates expected. According to one private firm, significant amounts of beans in Argentina, Brazil, and Paraguay have been lost to the hot, dry weather associated with a La Nina pattern, which will shift a lot of attention and export business to the U.S. and could lead to an increase in U.S. planted area in 2022. The Rosario Grain Exchange has Argentina’s soybean crop at 40 million tons. Argentina is the world’s biggest exporter of soybean products, while Brazil has the top spot for soybeans. Unknown destinations bought 295,000 tons of U.S. beans, mostly old crop. The announced sales total for the week was 936,000 tons, combined old and new crop, all to either China or unknown destinations. Soybean meal was higher and bean oil was lower on the adjustment of product spreads. India says it will place limits on the amount of oilseed and vegetable oil supplies held by processors and traders to limit further price inflation and hoarding. India is the world’s largest importer of vegetable oils.

Corn was modestly higher on fund and technical buying, ending the week mixed. Contracts found some support despite tighter ethanol margins and China’s recent export cancellation. More yield losses are also likely for corn in parts of Argentina and Brazil. The trade is also monitoring conditions in Brazil ahead of second crop corn planting. That critical crop is the source of most of Brazil’s exports and is planted after soybeans are harvested. The USDA’s next round of global production projections is out Wednesday, February 9th, with CONAB’s updated outlook for Brazil scheduled for release the following day. There’s also some position squaring against beans for 2022 U.S. acreage, with the USDA’s prospective planting numbers out at the end of March. Ethanol futures were unchanged.

The wheat complex was higher on fund and technical buying, with the most active months in Chicago, Kansas City, and Minneapolis still finishing the week in negative territory. Recent precipitation will help winter wheat in some areas, but it wasn’t enough to have end drought conditions some of the drier parts of the U.S. Plains. That’s having an impact on winter wheat conditions and could have an effect on spring wheat planting in the U.S. and Canada. The week’s precipitation was also generally welcome in the eastern Midwest, but some U.S. soft red winter growing areas do report excessive soil moisture. The tensions between Russia and Ukraine continued to be a background factor. The big development involving Russia Friday was a trade deal with China covering not only energy, but also Beijing ending restrictions on imports of wheat and barley from all of Russia. That move will strengthen ties between the world’s largest wheat exporter and a big buyer of wheat, while also freezing out the U.S. and several U.S. aligned nations, including members of the European Union.

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