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Soybeans see more profit taking

Soybeans were modestly lower on profit taking and technical selling. China bought 126,000 tons of 2019/20 U.S. soybeans, a routine amount, but the first since the phase one agreement, and while weekly sales were bullish, they were well anticipated. Treasury Secretary Steven Mnuchin says phase one of the U.S./China trade deal will be signed in early January. More tariff waivers are expected after the deal is signed. Beans are also watching crop development conditions in Argentina and Brazil, with some dry areas expected to receive much needed rainfall. Development in Brazil is moving ahead and the crop is reportedly in “great shape” and more than 60% of Argentina’s crop is planted. Soybean meal was lower and bean oil was higher on the adjustment of product spreads, along with reactions to the weekly export sales data.

Corn was fractionally mixed on spread adjustments. Weekly export sales were a new marketing year high after last week’s big purchase by Mexico, but it was another slow week for physical shipments. Corn was also waiting for the USMCA vote in the House, which passed after the close, while the Senate won’t take up the legislation until January. The USDA’s Cattle on Feed and Quarterly Hogs and Pigs report are expected to be supportive for feed demand expectations. Corn is also watching the very tail end of this year’s U.S. harvest, with the totals out in January. Those are usually the final word, but the numbers could be adjusted again because of the slow pace of harvest, especially in the northern U.S. Plains and upper Midwest. Corn is also watching development conditions in South America, with more than half of Argentina’s crop planted. China’s tariff rate quota for corn is reportedly 7.5 million tons, with no set quotas for DDGS or sorghum. Ethanol futures were higher. The EPA left the corn ethanol blending obligation level unchanged from 2019.

The wheat complex was mixed, with Chicago and Kansas City down and Minneapolis up. Wheat exports were also a new marketing year high, with the Philippines and Mexico leading the way. The trade is watching winter wheat development conditions in the European Union, the Black Sea region, and the United States. Germany reportedly planted 7% less wheat area this year, losing ground to rapeseed. Argentina is expected to further raise export taxes on wheat and other ag commodities, following up on last week’s increase. That’s expected to be a positive for U.S. export sales. China’s tariff rate quota for U.S. wheat is reportedly 10 million tons, but that’s expected to be completely free of ergot, which might be an issue for this year’s crop. DTN says Taiwan bought 104,600 tons of U.S. milling wheat. Japan has an open tender for U.S. food wheat, while Syria and Ethiopia also have open wheat tenders.

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