Soybeans up, continuing to follow meal

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Soybeans up, continuing to follow meal

Soybeans were higher on commercial and technical buying. Beans followed the sharply higher meal, supported by strong cash basis levels and solid demand, ignoring the losses in bean oil. Bean oil was pressured by losses in palm oil and canola, along with some disappointment over the EPA’s revised 2020 and 2021 blending mandates. The mandate will move higher for 2022 and the EPA says it will not take blending waivers from small refiners, which has been a huge point of contention over the past few years. Beans are also monitoring weather in South America, including forecasts for dry weather in portions of southern Brazil and Argentina, in-line with a La Nina pattern. That would likely trim yields at least to some extent. However, conditions look fairly good in central Brazil and the planting pace was faster than average. China bought 130,000 tons of 2021/22 U.S. beans, the fifth business day in a row with a sale, for a running total of 799,100 tons, all to either China or unknown destinations. The USDA’s weekly export sales numbers are out Thursday morning at 8:30 Eastern/7:30 Central.

Corn was narrowly mixed, adjusting spreads. The EPA lowered the 2020 and 2021 blending mandates due to pandemic impact but expects higher levels in 2022. Corn for ethanol demand has been strong, especially in the second half of the year, including a few weeks with near record production in late summer and early fall. The U.S. Energy Information Administration says ethanol production last week was a seven-week high at 1.09 million barrels a day, an increase of 55,000 on the week and 99,000 on the year. Stocks of 20.464 million barrels were the biggest since August, rising 163,000 from the previous week, but falling 1.619 million from a year ago. Ethanol futures were unchanged. Mexico bought 1,844,040 tons of U.S. corn, their largest purchase ever and the sixth biggest on record. Out of the total, 1,089,660 tons are for 2021/22 delivery, with the remaining 754,380 for 2022/23. Export demand for U.S. corn continues to be slower than expected overall, with competition from Argentina and Ukraine.

The wheat complex was mixed, mostly lower, with Chicago and Kansas City down and Minneapolis mostly weak. Paris milling wheat was lower ahead of the U.S. session and export demand remains slow, despite the tight global supply and slower sales from Russia. Most analysts are expecting a modest increase for U.S. and world wheat ending stocks in the monthly supply and demand report, out Thursday at Noon Eastern/11 Central. Still, those would be well below year ago levels. Most forecasts have further expansion of drought conditions in the southern and southwestern U.S. Plains. The trade’s also continuing to assess crop quality in Australia, while monitoring harvest activity in Argentina and conditions in the eastern Midwest, Europe, Russia, and Ukraine. The USDA’s attaché for the European Union sees 2021/22 production at 138.55 million tons, compared to the most recent official estimate of 138.4 million and the FAS’ 2020/21 total of 127.26 million tons. Exports this marketing year are expected to be 34.55 million tons, compared to 29.74 million last marketing year. DTN says a South Korean feed mill bought 50,000 tons of wheat each from the U.S. and Australia.