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Strength in meal sends soybeans higher

Soybeans were higher on commercial and technical buying. Beans followed meal which hit contract highs on aggressive spread unwinding with bean oil. With the recent meltdown in soybean oil, crush margins have narrowed, but remain in positive territory, for now. China bought 264,000 tons of U.S. beans and unknown destinations picked up 240,000, with both for 2022/23 delivery. That was the second day in a row with announced sales of U.S. soybeans for a running total of 634,000 tons. This spike in demand from China comes as Beijing reportedly relaxes its zero-COVID policy. Soybeans continue to keep an eye on weather conditions in South America, with many analysts expecting CONAB to boost their projection for Brazil Thursday. The USDA’s updated supply, demand, and production numbers are out Friday. That report could also see a higher estimate for Brazil against a cut in the outlook for Argentina. One recent bright spot for Argentina is Buenos Aires’ resumption of its soy dollar program, designed to boost sales.

Corn was lower on fund and technical selling. Nearby contracts were up for part of the session on the higher moves in beans and meal but couldn’t follow through because of wheat and the dollar. Corn is monitoring demand, along with planting and development weather in South America. Argentina and southern Brazil are expected to see a hotter, drier pattern into mid-month. Conversely, conditions in central and northern Brazil are expected to generally remain favorable. Export demand is slow due to hefty competition from Brazil and Ukraine and continued domestic interior movement issues, while ethanol demand has shown signs of slowing down with margins for some producers falling into the red. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday. The Renewable Fuels Association says October’s ethanol exports were 83.8 million gallons, down 17% from September, mainly to Canada, India, and the European Union, with DDGS exports at 798,100 tons, with Mexico and Vietnam topping the list.

The wheat complex was mixed, with Chicago and Kansas City down and Minneapolis mostly lower. Wheat continues to see slow export demand, with Russia currently holding most of the market share. Ukraine’s exports have slowed down due to slower inspections and sustained aggression by Russia. November wheat exports by Ukraine are estimated at 1.58 million tons, compared to nearly 2 million tons in October. A big part of the reason for the slow export demand for U.S. wheat despite tighter global supplies is the relative strength of the U.S. dollar versus other currencies, as evidenced by the Russian ruble. Pakistan has reportedly purchased as much as 950,000 tons of wheat this week, most of that expected to be from Russia. However, the recent drop in Chicago has made soft red winter more competitive with the European Union, while Kansas City and Minneapolis may end up benefitting from a lower quality crop in Australia, even with a record crop this year for that nation.

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