Soybeans, corn see slight oversold bounce

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Soybeans, corn see slight oversold bounce

Soybeans were modestly higher on commercial and technical buying. It was an up and down day, with support from oversold signals and bean meal, against pressure from soybean and crude oils. Bean meal was up and bean oil was down on product spread trade, with meal seeing extra support from oversold signals and oil picking up additional pressure from the lower moves in crude oil and palm oil. The broader market wasn’t fully bullish during the session, but it wasn’t fully bearish either. There is rain in the near-term forecast for parts of the region, but it is expected to miss some areas. The week-to-week decline in the USDA’s condition rating included some big drops in portions of the eastern Midwest. Traders are waiting for the export sales numbers Friday to see if any of the recently rumored cancellations by China are reported. Those numbers were pushed back a day by Monday’s July 4th holiday. In any event, Chinese demand for U.S. beans has slowed down as the less expensive Brazilian new crop hits the market.

Corn was modestly higher on commercial and technical buying. Corn is also watching development conditions, with moderate to heavy rain in some areas, against continued hot, dry weather in other areas. The USDA’s good to excellent rating for corn declined over the past week, driven down by that hot, dry weather in parts of the region. Domestic demand remains strong, including solid ethanol margins. The U.S. Energy Information Administration’s weekly ethanol numbers are out Thursday. CONAB’s updated production outlook for Brazil is also out Thursday. Safras e Mercado sees the total crop at 117.24 million tons, 880,000 less than their last guess, with the second crop at 82.15 million tons, 900,000 lower. The harvest of that critical second crop in Brazil is about a third of the way finished.

The wheat complex was modestly lower on fund and technical selling. Wheat is heavily oversold, but export demand continues to be slow even after the drop in price, partially due to the relative strength in the dollar. The USDA’s spring wheat rating was up sharply on the week following rain in the northern U.S. Plains and the winter wheat harvest is ongoing. The European Union says soft wheat exports for the recently ended 2021/22 marketing year were 27.47 million tons, 6.8% above 2020/21. Part of that boost was the continued near-total absence of Ukraine from the export market following the invasion by Russia. Talks regarding a Black Sea export corridor for Ukraine have resumed, mediated by Turkey, but any actual resolution, at this time, seems to be unlikely. What Ukraine is able to export is leaving by other methods, including rail, but logistics and continued conflict have stymied movement. The trade is also watching the impact of recent heavy rainfall in parts of Australia.