Soybeans, corn bounce back as wheat wilts

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Soybeans, corn bounce back as wheat wilts

Soybeans were modestly higher on fund and technical buying. Soybeans were oversold after outside market driven drop Tuesday, with concerns about U.S. development weather. The USDA’s most recent supply, demand, and production numbers were nominally bullish on soybeans, but not nearly enough to spark any kind of buying interest after the report or support much of a delayed rally Wednesday. Most forecasts are generally warm and dry heading into August, a critical month for soybean development. There have been no deliveries against July soybeans and the first deliveries on July bean meal were made this week. Soybean meal was higher and bean oil was lower on product spread trade. China’s General Administration of Customs says June soybean imports were 8.25 million tons, 23% less than June 2021 due to high prices and COVID concerns, with year-to-date purchases at 46.28 million tons, 5.4% slower than the year ago pace. There hasn’t been an announced sale of U.S. soybeans to China since June 1st and there’s talk of China canceling old crop U.S. beans in favor of Brazilian supplies. The USDA’s weekly export sales numbers are out Thursday morning.

Corn was modestly higher on fund and technical buying. Weather looks generally warm and dry over the next couple of weeks, potentially stressing the developing crop. That could trim yields in some key growing areas, but it’s far too early to fully gauge the weather impact. Contracts are oversold and domestic demand continues to be solid, with no deliveries against the July contract ahead of its expiration this week. The U.S. Energy Information Administration did report ethanol production fell last week for the fourth week in a row, averaging 1.005 million barrels a day, a decline of 39,000 on the week and 36,000 on the year. That’s due in part to some plants slowing production for Independence Day, along with demand concerns due to high gasoline prices. The domestic supply hit a five-week high at 23.606 million barrels, an increase of 116,000 from the previous week and 2.472 million from last year. The trade is also monitoring Brazil’s second crop harvest, while waiting to see when China starts buying Brazilian corn. China and Brazil agreed to corn trade in May, squelching what had been improved demand for U.S. corn as Ukraine remains largely out of the export market.

The wheat complex was modestly lower on fund and technical selling, unable to follow through on the early oversold bounce. The U.N., Russia, Ukraine, and Turkey have met about exports, with a lot of uncertainty and conflicting reports about a possible resolution. That’s due to several factors, most of those centered on Russia. Moscow wants sanctions removed, Russian forces have destroyed parts of Ukraine’s Black Sea port infrastructure and are burning Ukrainian crops, and Russia is allegedly selling stolen Ukrainian grain. Ukraine has exported just over 500,000 tons of grain since the start of the marketing year July 1st. Demand for U.S. wheat remains slow, partially due to the strength in the dollar. The dollar was a little bit softer by midday Wednesday but is still up sharply on the year. A higher dollar makes U.S. goods more expensive on the export market. The U.S. winter wheat harvest is ongoing and there’s some rain in the forecast for parts of the spring wheat region in the northern U.S. Plains and Canada.