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Soybeans up, expecting more rain in Brazil

Soybeans were higher on speculative and technical buying, while still closing mixed for the week. The Buenos Aires Grain Exchange lowered its guess for Argentina following harvest delays and there is more rain in the forecast for southern Brazil. That includes the key crop state of Rio Grande do Sul, which has been hit hard by flooding, with some areas seeing more than 30 inches of rain recently, delaying harvest activity and causing some crop loss, along with a significant human toll. The USDA’s next round of supply, demand, and production numbers is out June 12th, with CONAB’s updated outlook for Brazil set for release the following day. That crop loss in Brazil has pushed their basis higher, bringing it closer to the U.S., and could spark some new export demand if it continues to gain ground. That said – it remains to be seen how much of that would come from China, given the recent active demand for Brazil’s beans from Beijing and potential trade with the U.S. Stateside, near-term planting conditions continue to more favorable in some areas than others. The final acreage mix remains in question, but that’s often true in mid-May, even during “normal” planting seasons. Soybean meal was mixed on bull spreading, with nearby contracts up and deferred months down, while bean oil was supported by the lower-than-expected NOPA crush numbers and strength in global vegetable oils.

Corn was lower on profit taking and technical selling, adding to the week’s losses. U.S. planting has moved forward in some areas, but rainfall in other areas is keeping farmers out of the field. The USDA’s weekly crop progress and condition report is out Monday at 4 Eastern/3 Central. France’s AgriMer says 72% of that nation’s corn crop is planted. Hot, dry weather is impacting second crop development in central and northern Brazil, while corn, and other crops, in southern Brazil have been heavily affected by heavy rainfall and flooding, with the potential for more. Brazil’s second crop is the largest of the three and the source of most of their exports, so this could lead to some new U.S. export opportunities.

The wheat complex was lower on profit taking and technical selling, ensuring a lower weekly finish. For now, it looks like most U.S. and global weather issues are priced into the market. Freeze damage in Russia has lowered production potential, while also pushing their prices higher, which could help U.S. exports. Of course, that depends on several other factors, including the strength of the dollar relative to other currencies. Other areas of Russia and parts of Ukraine are also struggling with dry weather. Key U.S. hard red winter growing areas remain dry, but overall conditions are much better than last year, as evidenced in the recent crop tours in Kansas and Oklahoma. France’s AgriMer says 64% of that nation’s wheat crop is in good to excellent condition, unchanged from a week ago. Germany’s state statistics office expects winter wheat harvested area to be below a year ago because of lower planted area caused by excessively wet weather.

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