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The short term trend remains up, but the market is a bit overbought and the short term weather situation still looks somewhat negative. However, the smaller production estimates coming out of Argentina, Paraguay and Brazil could add up to a significant shortfall of production. Farmer selling in South America is slow as well and traders see the potential for a significant tightening in global ending stocks for the current season. March soybeans close slightly higher on the session yesterday with a quiet inside trading day. Solid gains in the soybean oil were offset by weakness in the meal market.

Recent weather improvements in Argentina and southern Brazil have begun to ease crop concerns. We have heard of crop estimates which have dropped as much as 14 million tonnes for Brazil alone. If total South America production is down 14 million tonnes from the January update, world ending stocks would drop to 81.2 million tonnes which would be the lowest since the 2015/16 season. World stocks/usage would drop to 21.6% which would be the tightest world stocks situation since the 2008/2009 season.

Canola processing declined 22.1% in December from a year ago, according to Statistics Canada data. Oil production totaled 294,000 tonnes, and meal output at 423,000 tonnes. August to December crushings were down 13% from year ago to 3.802 million tonnes.