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Soybeans higher on optimism about China

Soybeans were higher on short covering and technical buying. There’s continued optimism about the proposed deal with China with the next round of tariffs scheduled to go into effect on the 15th. That being said – there’s no official word on the amount of U.S. beans that will be covered under Beijing’s new tariff waivers. China bought a lot of beans last month, 8.28 million tons, up 34% on the month and 54% on the year, and Brazil has reportedly pulled all offers for soybeans through January. Some forecasts also have harvest delays for parts of Brazil, potentially extending the U.S. export window even further. Weekly export inspections were neutral to bullish, mainly headed to China. The 2019 U.S. soybean harvest has officially wrapped up and the trade is also watching conditions in Argentina and Brazil. CONAB will also issue an updated crop production estimate for Brazil Tuesday. Safras e Mercado has Brazil’s 2020 soybean crop at 125.5 million tons. Soybean meal was lower and bean oil was higher on the adjustment of product spreads. Continued strength in world vegetable oil prices was also supportive for oil and beans. Canada’s canola crop is the smallest in four years because of wet weather during harvest causing greater than normal abandonment.

Corn was modestly lower on fund and technical selling. The trade was waiting to see what the USDA would report in the weekly harvest update, with most expecting another week of mixed progress. The USDA says 92% of the crop is harvested, compared to 89% last week and the five-year average of 100%. The survey for January’s numbers is ongoing and weekly reports resume in April 2020. Parts of the northern Plains and Midwest will see more snow this week, further delaying harvest activity in those areas, while creating more quality concerns and increasing dry down costs for what does get harvested. Some of the crop might not get out of the field until 2020. The USDA isn’t expected to make any changes to the 2019 U.S. corn production estimate this week. There was no reaction to news that a tentative deal has been reached on the USMCA. Weekly export inspections were bearish, with Mexico and Japan the leading weekly recipients. Ethanol futures were lower. The 2020 ethanol mandate revisions have reportedly been sent to the Office of Management and Budget. France’s AgriMer says 94% of that nation’s corn crop is planted, slower than average because of heavier than normal rainfall.

The wheat complex was mostly lower. Chicago and Kansas City were down, watching winter wheat development, and Minneapolis was mostly up on short covering. New USDA supply, demand, and production numbers are out Tuesday at Noon Eastern/11 Central. Not a lot of changes are expected to the domestic balance sheet for wheat, with most of the probable adjustments seen in the global production and trade projections. Export inspections were neutral to bearish, continuing to slow down in the face of ample global competition. Thailand and Mexico were the top two destinations. France’s AgriMer says 83% of that country’s soft wheat crop is planted, compared to 99% a year ago following heavy rainfall. 73% of the crop is rated good to excellent, compared to 75% the week before and 82% last year. FC Stone International has Australia’s wheat crop at 14.97 million tons, below most major estimates. DTN says South Korea is tendering for 60,000 tons of feed wheat and Ethiopia has two open tenders for 75,000 tons of milling wheat. Iraq’s government says it will need to import 750,000 tons of wheat in 2020.

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