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Soybeans set to gain for 4th year amid Argentina drought, China demand

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SINGAPORE — Chicago soybeans rose on Friday, with the market poised to gain for a fourth straight year, lifted by a drought in key supplier Argentina and expectations of strong demand from China.

Wheat futures edged higher, putting the market on track to finish 2022 largely unchanged, having jumped to an all-time high in March after Russia’s invasion of Ukraine curbed global supplies.

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“Argentina is expecting more dry and warm conditions to follow this weekend’s light rains,” the Hightower said in a report. “This will likely increase crop stress and add to an already stressful situation there.”

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The most-active soybean contract on the Chicago Board of Trade (CBOT) rose 0.7% to $15.26-1/4 a bushel, as of 0445 GMT, wheat gained 0.2% to $7.75-3/4 a bushel and corn rose 0.1% to $6.80-1/4 a bushel.

For the year, soybeans are up almost 14% while wheat, which has closed higher for the last five years, has added less than 1%. Corn has gained about 15%.

A severe drought is likely to reduce soybean output in Argentina just as demand in China, by far the world’s top importer, is expected to recover after the country eased strict COVID-19 controls.

Resumption of wheat exports from Ukraine under a U.S.-brokered deal has weighed on wheat prices in the second half of 2022, although harsh cold weather across North America has raised concerns over 2023 supplies.

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Deliveries against CBOT January soybean futures should be thin on Friday, reflecting relatively firm domestic cash markets for the oilseed, traders and analysts said on Thursday.

Some participants booked profits after the rally in grains that may have been amplified by thin holiday volumes, traders said.

Argentina’s estimated wheat production for the 2022/2023 season could be slashed again in the coming weeks due to lower- than-expected yields, the Buenos Aires grains exchange said on Thursday.

Late frosts and a historic drought have caused the exchange to cut its estimate for the South American country’s wheat crop to 12.4 million tonnes from an initial estimate of 20.5 million tonnes seen at the beginning of the season.

U.S. wheat markets remained capped by Russian exports, highlighted by a purchase of 200,000 tonnes of Russian wheat by Egypt this week.

Commodity funds were net buyers of CBOT soybean and soyoil contracts on Thursday, and net sellers of corn, soymeal and wheat futures contracts, traders said. (Reporting by Naveen Thukral; editing by Uttaresh.V and Vinay Dwivedi)

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