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Soybeans, corn bounce off recent lows

Soybeans were higher on commercial and technical buying, rallying from the recent lows. The fundamental outlook remains bearish, with an expected record U.S. crop and a lack of any real progress in trade talks with China, but beans were viewed as a good value. There are indications China is considering mandating a lower ratio of soybean meal in feed mixes to reduce reliance on soybean imports, especially from the U.S. Cash soybean prices remain near more than 10-year lows. Soybean meal and oil were supported by oversold signals, with meal continuing to hold a product spread advantages. According to wire reports, Argentina’s new budget would hike soybean exports taxes to 33% until the end of 2020. Widespread soybean planting is reportedly underway in Brazil. Statistics Canada estimates 2018 soybean production at 7.515 million tons, 2.6% less than 2017, with canola at 20.999 million tons, 1.5% lower.

Corn was modestly higher on short covering and technical buying, along with spillover from beans and wheat. Corn also bounced off the recent lows, looking at neutral to bearish fundamentals and expectations for harvest delays in some key U.S. growing areas. Corn is also watching NAFTA renegotiations with Canada. The USDA’s next set of supply, demand, and production estimates is out October 11th. Ethanol futures were lower. The U.S. Energy Information Administration says ethanol production averaged 1.051 million barrels a day last week, up 31,000, while stocks were down 148,000 barrels at 22.746 million. Corn is also watching early planting activity in South America. Stats Canada projects record corn production this year at 14.461 million tons, a 2.6% rise from last year.

The wheat complex was higher on commercial and technical buying. The trade is continuing to assess frost damage in Western Australia, expecting at least some increase in export demand for U.S. wheat. The trade is also watching winter wheat planting weather in the U.S., Europe, and Russia. Stats Canada did issue a bigger than a year ago crop projection for all types of wheat, up 3.5% at 31.019 million tons, but there are uncertainties about quality. Out of the total, spring wheat is pegged at 22.91 million tons, a 3.4% increase, durum is seen at 5.706 million tons, a jump of 15%, and winter wheat is expected to make up the remaining 2.394 million tons, a drop of 16.1%. Egypt made two purchases from Russia, 295,000 tons and 180,000 tons, while Syria purchased 200,000 tons of milling wheat, also from Russia. Turkey is tendering for 252,000 tons of optional origin wheat.

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