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Soybeans fail to rally, see more losses

Soybeans were lower on speculative and technical selling, unable to follow through on some early firm trade. Near-term development weather looks mostly favorable, but there is a chance of hotter, drier conditions in some areas. Still, at this point, crop conditions, on the balance, are much better than a year ago and there won’t be any significant yield adjustments from USDA for a while. China bought 132,000 tons of 2024/25 U.S. beans, Beijing’s first announced outright purchase of new crop U.S. beans. There have been reported sales to unknown destinations and it remains to be seen if this is the start of a trend or just China making a routine buy. The recent move to multi-month lows in China’s domestic soybean prices is not a positive sign for demand. Brazil continues to hold a price advantage over the U.S. and politically, there’s a closer relationship between Brazil and China than the U.S. and China, especially with the uncertainties over November’s U.S. elections. ANEC projects Brazil’s soybean exports for July at 10.29 million tons, compared to the earlier estimate of 9.5 million tons. Exports during June were 13.947 million tons, most of that to China. CONAB’s updated outlook for Brazil’s crops is out Thursday, in addition to the USDA’s weekly U.S. export sales numbers. Soybean meal and oil were lower on speculative selling, even as crush margins remain bullish.

Corn was mostly modestly lower, adjusting spreads. Corn is watching development conditions, with temperatures expected to rise this weekend. Any concern about that is limited, for now, with the USDA’s national condition rating holding well above last year’s levels as the crop moves through the pollination phase. Losses were limited by good export demand and solid ethanol margins. The U.S. Energy Information Administration says production last week averaged 1.054 million barrels a day, down 10,000 on the week partially due to transportation issues caused by flooding, but up 22,000 on the year, buoyed by those margins. Ethanol stocks were reported at 23.603 million barrels, an increase of 9,000 from the previous week and 945,000 from a year ago. The European Commission says the European Union imported 19.4 million tons during the recently ended 2023/24 marketing year, a drop of 27% from 2022/23. ANEC sees Brazil’s corn exports for July at 4.09 million tons, compared to the last projection of 3.4 million tons. Brazil’s corn exports for June were 850,893 tons, the largest monthly total since February.

The wheat complex was lower on fund and technical selling. Russia continues to dominate the export market, holding a big price advantage over competitors. The USDA’s updated supply and demand numbers are out Friday. The trade is watching U.S. winter wheat harvest activity and spring wheat conditions, along with the expanding drought in parts of Russia and Ukraine, potential harvest delays in portions of Europe, and the potential for a freeze event in Argentina. The European Union’s farm lobby group COPA-COGECA estimates the bloc’s 2024 wheat crop at 117.5 million tons, 6.4% less than 2023. The European Commission says E.U. soft wheat exports for the 2023/24 marketing year, which ended June 30th, were 31 million tons, compared to 31.6 million in 2022/23. StoneX sees Brazil’s wheat crop at 8.22 million tons, 6% above a year ago, with an export potential of 1.56 million tons, compared to last month’s guess of 1.46 million tons. India’s government will reportedly sell wheat from state reserves to limit domestic price inflation.

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