Brazil

U.S. Soybeans at a Crossroads: Navigating China Trade and Brazil’s Rise

Thu, 12 Feb 2026 14:27:14 GMT

Deglobalization is nothing new in agriculture — the U.S. has been losing export share for decades. As rapid expansion and modernization continue around the world, the ag industry is navigating new pressures and opportunities to remain competitive. Experts who work directly in global trade say American farmers need to recognize what’s changing and what it could mean for their operations.

China Trade Framework Details

U.S. farmers were excited when President Donald Trump and Chinese President Xi struck a trade truce and framework in South Korea on Oct. 30, especially the 12 MMT of soybean purchases . However, the lack of clarity on if the commitments were for the calendar year or the marketing year left the market in disarray.

At the 2026 Top Producer Summit, Jiang Lyu, minister for economic and commercial affairs at the Chinese Embassy in the U.S., confirmed the 12 MMT is for the current marketing year.

“You do hear those numbers from President Trump, Secretary Bessent and others,” Lyu says. “All I can share with you is that China is pretty sincere in terms of having a relationship that is anchored on mutual respect, reciprocity and, most importantly, mutual benefit. We believe stability in this trade relationship, including in the ag trade, is very important, and we hope this mutually beneficial relationship will continue.”

To date, U.S. Trade Representative Jamieson Greer says China has purchased 12 MMT, but the purchases have only been made by Sinograin and Cofco, which are government entities. The 13% reciprocal tariffs China still has on U.S. soybeans makes it unfeasible for private crushers to buy and is 10% higher than the tariffs on Brazilian soybeans. The question remains, when will China eliminate that tariff?

Lyu says he’s not sure on the timing, but that China would like to advance discussions between the two countries to the point that tariff could be eliminated. There is hope that can happen when the two leaders meet in April.

“This is, to borrow your word, a trade truce,” said Lyu. “So the truce has a time of one year. We would like this one year to be extended and preferably into eternity.”

Opportunities to Expand China Trade

The Chinese market is ripe for expanding trade, according to Lyu, through new areas of U.S. and China agricultural cooperation. He cites platforms, such as the China International Import Expo, will bring new opportunities for U.S. agriculture.

The China-U.S. economic and trade relations benefit both sides when they cooperate, adds the minister, but harm both when they are confrontational. However, he says the Chinese market has broad prospects and large capacity, and bilateral trade meets mutual needs.

China to Buy 8 MMT More Soybeans?

Meanwhile, President Trump posted via social media on Feb. 3 that China had agreed to buy another 8 MMT of old-crop soybeans from the U.S. Why would China purchase from the U.S. when Brazil’s soybeans are over $1 cheaper than U.S. soybeans?

While this doesn’t make economic sense, Susan Stroud with No Bull Ag says these political goodwill purchases are being made by government entities to put in their reserve. Lyu says the relationship needs to be stabilized before moving forward.

“China and the U.S. need to reposition their relationship overall so that we have a bigger-picture arrangement in which China is no longer considered as a rival competitor to an extent, not a rival or enemy of the United States,” Lyu says. “There are so many things happening here that also hamper China’s interest, such as Chinese exports into this country or the Chinese investment into this country, so we would like this relationship to be totally benign.”

Under the latest trade framework, China is also expected to buy 25 MMT of U.S. soybeans for the following three years.

“If you consider the potential for 25 million metric ton per year in three subsequent years that’s still well below the five-year average,” Stroud says. “China has yet to confirm any of these amounts that have been touted by Washington.”

There’s still the lingering question about what happens after that? The U.S. is already a secondary supplier of soybeans to China behind Brazil.

Brazil Primary Supplier of Soybeans to China

Brazil is producing over 6.5 billion bushels of soybeans annually, and Stroud says their rapid conversion of pastureland into soybean production has reshaped global flows.

“A 5% average increase in soy area annually has taken them from an emerging market to a global powerhouse in the blink of an eye,” she explains.

Brazil first outexported the U.S. in 2012. Today, exports more than double the U.S. program. Since the last trade war, Stroud says Brazil has added 30 million acres of soybeans, which is a harvested area larger than the top four U.S. soybean states combined in 2025.

“In the past 25 years, Brazil has accounted for half of all of soybean global area expansion,” Stroud says. “When you have a tremendous growth in production, naturally, you’re getting rid of it via export.”

Stroud says Brazil is actively making infrastructure improvements from farm to port to not only accommodate its expanding production but also improve efficiency. China actively has a hand in this as Brazil is their number one supplier of soybeans. On average, 50% of Brazil’s total soy demand is exported to China compared with one in four bushels of U.S. soybean demand.

Brazil Has Room to Expand Soybean Acres

Brazil has the potential to expand acreage by converting an available 70 million acres of degraded pasture to cropland. Aaron Edwards with Santos Springs LLC says Brazil’s growth is far from over.

“For every acre of row-crop land, there’s two acres of degraded pasture,” Edwards says. “Without any deforestation, a significant amount of that land could become row crops.”

Agronomically, he says, with a few tons of lime, phosphorus and minimum tillage, in two or three crops these fields could be producing on par with Midwestern “I” states.

“Every acre you bring into soybean production, about one-third also become double-crop corn or double-cropped cotton acres,” Edwards adds. “Brazil expansion is a bear.”

Then there’s the potential of improvements via irrigation. He’s hearing estimates of 10 million acres going under pivot within the next decade.

“It’s a tropical climate, so one acre of irrigation is three crops a year, depending on the mix, or seven crops in two years,” Edwards explains. “That right there is 30 million acres equivalent of production.”

Currently, they have less than 15% on-farm storage and that leaves potential for better margin management on the table.

“Basis swings on soybeans are $2 to $3,” Edwards says. “Margins can increase just by putting in on-farm storage and managing basis.”

It takes a massive amount of capital investment to drive acreage and yield growth, he adds, but it creates long-term supply pressure in global oilseeds.

The Brazil “Paradox:” Expansion Amid Bankruptcies

The paradox, Edwards says, is how does Brazil rapidly expand amid bankruptcies, but he thinks the two can coexist.

“The primary economic incentive isn’t operating margins — it’s land appreciation from converting pasture to cropland,” he says.

He thinks cash flows and aggressive expansion increase supply and lower prices, making periodic financial stress inevitable.

“The land appreciation of developing these lands is what’s causing the expansion, causing the bankruptcies and putting soybeans on the market at such a cheap price,” Edwards explains. “However, the microeconomic incentives of expansion are there as long as there’s land appreciation.”

Rethinking Global Competition in Soybeans

The U.S. still has structural advantages such as infrastructure and logistics, plus capital, strong risk management and supportive policy, according to Edwards.

“The U.S. is still the best place to do business, and at the end of the day, you run a business,” he adds. “We have better logistics, better capital markets, better infrastructure, better risk management tools and more supportive policy. Those are the things that allow you to run a successful business.”

With that said, Edwards says farmers might have to rethink global competition. This includes who produces the most soybeans, and who delivers the cheapest export supply? Where can farmers sustainably build profitable enterprises? He says leadership in volume doesn’t always equal leadership in farm profitability.

U.S. Needs to Pivot to Domestic Demand

The U.S. is already expanding crush a projected 30% in the next few years to process bean oil to meet the growing demand for low-carbon fuels. Stroud says that might be one of the best options for the U.S. to find more domestic demand and decrease its dependence on China and exports.

“Right now, we’re about 50% of the way there in the buildout,” Stroud says. “This marketing year, we are adding 115 million bushels of annual crush capacity. Compare that with typical exports to China in the 1-billion-bushel range and there’s really no comparison. But, we are moving the needle.”

She cautions this growth is policy dependent, but the U.S. is also exporting more soybean meal than ever before.

Argentina Viewpoint

Lee Trimmer with Green Shoots LLC has spent the last 25 years working in Argentina.

“We have great soils, we’re close to the ports and we can create crops at a better price than other places,” he says. “Honestly, it comes down to who can do it cheaper.”

However, there is a paradigm shift happening with Brazil becoming the largest exporter. As farmers, he says, they have had to reinvent their business model.

Trimmer says Argentina is also one of the most complex and unforgiving places to be a farmer. His plan was to buy machinery, build a storage facility, stay away from livestock, and try to start buying land. However, the business he built in Argentina was the exact opposite.

He says the key to staying competitive has been to find great mentors. He is also involved in a peer group in Argentina known as CREA in which farmers open up their farms to bring valuable experiences to other farmers. They talk about what works or doesn’t work on their farms and provide other advice.

“I think a lot of it has to come down to farmer savvy, education, getting to know your peers, finding niches and getting ideas from other producers,” Trimmer says.

He told farmers at Top Producer Summit they can’t do anything about trade wars with China or Brazil increasing exports every year. But they can look to their own farms and make changes that open up new opportunities.

“I encourage farmers to put time and money into educating themselves, not just on producing more bushels. Dig down deeper to make your farm and legacy resilient for the future,” he says.

'Everything’s a Game of 3D Chess': The Real Reason Behind U.S. Ties to Argentina

Fri, 24 Oct 2025 19:32:25 GMT

The U.S. is tightening ties with Argentina, and that’s raising eyebrows across farm country.

From a $20 billion bailout to plans to import Argentine beef, farmers and ranchers say the growing alliance feels like it’s coming at the expense of U.S. agriculture.

But according to Arlan Suderman, chief commodities economist with StoneX, there’s more to this story, and it has everything to do with China .

A Geopolitical Chess Match

“Everything’s a game of 3D chess,” Suderman explains. “At the center of it is China.”

For years, China has been strengthening ties with Argentina, investing heavily in infrastructure and agriculture to secure long-term supply lines and influence. Suderman says the U.S. sees an opportunity to pull Argentina away from Beijing’s orbit, using economic incentives to win its allegiance.

“The White House sees this as a way to create a split between Argentina and China,” Suderman says. “It’s not just about soybeans or beef. It’s about global positioning.”

The Beef Backlash

But for cattle producers, that strategy feels like betrayal. President Donald Trump’s recent talk of importing Argentine beef sparked anger across rural America. Many worry increasing imports will undercut domestic markets.

Suderman urges producers to stay calm. He points out the announced beef imports, around 80,000 metric tons, are only equal to about two day’s worth of U.S. beef production.

“It’s not enough to impact prices,” he says, “but it does show a disconnect between Washington and agriculture.”

He adds that advisers to the president might have misunderstood how ag markets work.

“These aren’t controlled industries like pharmaceuticals,” Suderman notes. “Ag markets are driven by supply and demand, and right now, we have record demand with tight supply.”

Soybean Farmers Feel Left Behind

While beef producers protest, soybean farmers are already bruised. Argentina’s temporary suspension of export taxes earlier in the year allowed them to undercut U.S. prices and quickly sell beans to China — a major blow to American growers. Suderman says it’s a reminder that the U.S. is no longer the world’s low-cost soybean producer.

“Argentina and Brazil have a cheaper currency and lower costs,” he explains. “And China has been investing there for decades.”

Suderman says he’s been warning the industry for years that the U.S. would eventually lose China as its top soybean buyer.

“This didn’t happen overnight,” Suderman says. “China has been building toward this for 20 years. The current administration may have sped it up, but it was coming.”

Beijing’s refusal to buy American and its pivot to Brazil could be less about economics and more to do with politics. “It’s a calculated decision about control and national leverage, not about getting the cheapest beans,” says one ag economist. Read more here.

Caught in a Bigger Battle

Beyond agriculture, Suderman says the real fight isn’t over soybeans — it’s over rare earth minerals. China currently controls about 90% of the world’s processed rare earths, which are essential to making electronics and advanced defense systems.

“That’s the real leverage,” he says. “Soybeans are small compared to the rare earth battle.”

The Trump administration is now trying to expand domestic rare earth supply chains, sourcing from Australia, Greenland and even within the U.S. But Suderman says it could take two to three years before those efforts meet national defense and economic needs.

What Farmers Need to Know

To many farmers, Washington’s global strategy feels like it’s coming at their expense. While the administration is playing the long game with China, rural America is paying the short-term price. Still, Suderman sees opportunity ahead if the U.S. can continue developing new markets, strengthen biofuel demand and tap into growing trade opportunities in Africa and beyond.

“We weren’t ready to give up China,” he admits, “but we need to look forward not backward.”

How Current Weather Trends Are Shaping Global Grain Production

Tue, 21 Oct 2025 20:36:51 GMT

Kevin Marcus of Marcus Weather Consulting gives the areas to watch as harvest goes into the home stretch in the northern hemisphere and the growing season is shaping up in the southern hemisphere.

Looking at the U.S., South American and Chinese weather patterns, here are his takeaways on the impact and outlook of weather:

U.S. harvest season is a mirror of 2024 in many ways.

Marcus says for many in the Midwest, September and October are echoing patterns this time last year being warmer and dryer than average.

He notes two earlier weather patterns in the year are bringing attention to their impact on yields.

In the eastern corn belt, the prolonged heat may have dinged yields.

“We had lots of warm night sin July and August,” he says. “For some, it was the highest numbers since 2010 and 2011.”

When nighttime temperatures remain elevated, the respiration steals from grain development resulting in shallower kernels.
In the western corn belt, the focus is on the favorable conditions for disease—including the expansion of southern rust.

“We’re seeing southern rust stealing 40 to 50 bu/acre in fields that were left untreated,” Marcus says. “Iowa was the epicenter of the problem, and if just 10% of the fields weren’t sprayed properly at a 50 bu loss, that’s 5 bu. off the state yield. And 1 bu. off the national yield.”

You can hear more about his weather analysis and the effect on yield estimates here:

La Nina is a factor.

Marcus is watching the development of La Nina, warmer waters in the eastern Indian ocean and systems and patterns developing in southeast Asia. He says it all adds up to polar jet getting invigorated.

As such, he sees “more of a slug” for the finishing weeks of corn harvest across the Midwest.

And this winter, especially compared to last year, he sees wet heavy snow across the northern plains starting in November.

Questionable start for the southern hemisphere.

As Brazil and Argentina’s growing seasons get kicked off, there’s cooler and less wet weather.

“This isn’t typical. It usually rains every other day. Now it’s only raining once a week. And temperatures are popping above 100 degree. Young crops are being stressed early,” Marcus says.

Looking ahead, he notes there aren’t any “red flags” for the weather dramatically effecting yields, but there is definitely risk in the forecast.

China’s domestic production is a question mark.

Marcus says a developing story to watch are yields for the Chinese corn crop.

“We just came through seven weeks of exceptional rain in the north China plains,” he says. “When corn can’t be harvested, and you’re getting rains every other day for seven weeks, you have an idea of what that quality will look like.”

When a comparable weather pattern occurred in 2022, Marcus points to private estimates stating a loss of 30 million metric tons.

Economists Fear Trade War Will Push Agriculture Deeper Into a Recession

Fri, 02 May 2025 17:19:11 GMT

Agricultural economists are growing even more pessimistic as the latest Ag Economists’ Monthly Monitor shows the majority are concerned President Donald Trump’s tough stance on trade could push agriculture deeper into a recession while also giving Brazil more of a competitive edge. As one economist stated, the stakes are high, and the key is whether Trump’s policies push ag deeper into a recession, and if U.S. agriculture can survive without China.

The Ag Economists’ Monthly Monitor is a survey of nearly 70 agriculture economists nationwide. This month, 72% of those surveyed say the row crop side of agriculture is in a recession, up from 62% last month. Eighty-two percent of economists also think this could force more consolidation in agriculture.

Despite Trump’s 90-day pause on tariffs for most countries except China, economists stress agriculture is in peak uncertainty.

Of the 72% who think agriculture is in a recession, their reasons are:

Compressed margins and concern about operating debt carried over from last year.
Prices for most crops have declined more than production expenses since 2022.
Negative returns for at least the third consecutive year across nearly all row crops.

Yet, the 28% who believe the crops side of agriculture isn’t in a recession say:

“Profit opportunities are there, but slim.”
“Economic performance and growth of U.S. ag is slowing and/or stable but not declining. It’s too early for the impacts of tariffs to change ag business decision-making.”
“Given the volatility in the crop session, a recession requires at least two bad return years, where returns include both private market and government payments. We do not know about 2025 yet, nor do we know the extent of government payments for 2024 crops yet and thus what will be the total return for 2024.”

Economic Drivers

In the survey, 42% of economists said the current state of the ag economy is “somewhat worse” than a month ago, while 26% said it’s unchanged. But when you compare outlooks to a year ago, 58% of economists responded the ag economy is somewhat worse.

Ag Economists’ Monthly Monitor

(Lindsey Pound )

Economists were asked to list the two most important factors driving agriculture’s economic health today, as well as in 12 months. Tariffs and trade war topped the list.
“Weather will always be one of the primary factors, but we can add President Trump’s efforts to restructure global trade to that list this year. We’re in worse shape if he fails and better shape if he succeeds. Big stakes,” one economist said.

In addition to tariffs and the trade war, economists also said:

Inflation
Interest rates
Political uncertainty
Consumer demand
Status of trade issues and the supply-side (crop size) of the balance sheets.
The inability of farmers to manage price volatility due to uncertainty around trade

High Stakes with Trade

Agriculture is an export dependent business. According to the Trump administration, when it comes to tariffs and the impact on the overall economy, long-term gain will be worth the short-term pain. However, when it comes to agriculture, the economists surveyed don’t agree.

When ag economists were asked if they think Trump’s strategy of using tariffs as a negotiating tool will benefit U.S. agriculture in the long run:

76% responded no
24% responded yes

April Ag Economists’ Monthly Monitor

(Lindsey Pound)

Since the last trade war, Brazil has gained ground and displaced the U.S. as the top corn exporter in 2023. Economists believe it won’t be the U.S. benefiting from this trade turbulence, but instead these competitors:

Brazil (76% of responses)
China (12% of responses)
India (6% of responses)
Ukraine (6% of responses)

Will Farmers Be Compensated for Short-Term Pain?

As Web reported, Agriculture Secretary Brooke Rollins has stated since winter that if farmers suffer financial pain from the trade war, the Trump administration will look at compensating farmers at some point.

April Ag Economists’ Monthly Monitor

(Lindsey Pound)

Of the economists surveyed, 89% think USDA will compensate farmers with financial payments, similar to what the previous Trump administration did with the Market Facilitation Program Payments (MFP). However, 80% of economists say it’s too early for USDA to be considering compensating farmers for financial fallout.

Bottom line:

The risks are high. Unless the U.S. invests in domestic manufacturing over an extended period, the loss from exports could be a big hit to ag commodities. But if the Trump administration can gain more trade access to key countries, the rewards could be even bigger.

Your Next Read:

92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

Fri, 21 Mar 2025 14:47:55 GMT

President Donald Trump hasn’t been shy about using tariffs as a negotiating tool. As he cracks down on fentanyl and illegal border crossings, he’s also pushing to restore what he calls fairness in U.S. trade relationships and countering non-reciprocal trading arrangements.

The reality for agriculture is the U.S. agricultural trade deficit hit a record in 2024 as imports soared, and Trump says he wants to reverse the trend.

According to the Trump administration, when it comes to tariffs and the impact on the overall economy, long-term gain will be worth the short-term pain. However, when it comes to agriculture, ag economists survyed in the March Ag Economists’ Monthly Monitor don’t agree.

Ninety-two percent of economists think Trump’s strategy of using tariffs as a negotiating tool won’t benefit U.S. agriculture in the long run.

Here are some of those economists’ comments from the most recent Farm Journal Ag Economists’ Monthly Monitor survey.

“Food as a weapon doesn’t have a successful track record, see Jimmy Carter and the 1980s,” responded one economist in the anonymous survey. “It’s not a guarantee as it’s like playing Russian roulette; you might ‘win,’ but the risks are huge.”
“Farm Journal readers should learn about the long-term consequences of Smoot-Hawley. It wasn’t just about the economic costs — it was also about the relational damage between trading partners. I have a hard time believing we will rebuild these relationships any time in the foreseeable future,” another economist said.
“It depends on whether tariffs are used as a negotiating tool with the ultimate goal of reducing trade barriers, or whether they instead result in a world with higher barriers. The president’s emphasis on tariffs as a way to raise revenue suggests tariffs and their consequences may persist,” was another economist’s response in the Monthly Monitor.

However, one economist wasn’t as certain, saying, “For it to be beneficial depends on it being short lived and resulting in trade initiatives with market access or purchase commitments. And in the meantime, action is taken quickly related to Trump’s post to offset trade loss with increased domestic use such as removing dated rules that limit ethanol blends, renewing or creating biofuels production incentives, and adding SAF as a mandated fuel.”

Trade War or No Trade War?
What an overwhelming number of agricultural economists do agree on is that the U.S. is in the midst of another trade war. Ninety-two percent of economists say a trade war is already here, while only 8% responded no.

“I don’t think anyone is arguing with the notion that we are in another ‘trade war,’” one economist said. “This one is far bigger and far more consequential than the last one we were in.”

“It seems more like a trade cold war,” another economist responded. “The situation is ever-changing, and it is hard for buyers, markets and producers to anticipate reality and effect. The threat of tariffs is almost as effective as a tariff.”

As agriculture tries to navigate the turbulence and shocks of another trade war, the ultimate question is: Who wins in a trade war? According to Romel Mostafa, professor of business, economics and public policy for the Ivey Business School in London, Ontario, it’s neither the U.S. or Canada.

“If we think about U.S. and Canada, we both lose,” Mostafa says. “The way our markets are integrated, both from the input side as well as the product side, any tariff really increases cost of production for our farmers all the way to food on the table. What then happens, essentially, some of our products are going to be less competitive in major markets than where we compete. Who then benefits? Perhaps Brazil, Russia or other countries.”

Other agricultural economists agree: If you’re looking at the trade war between the U.S. and Canada or the U.S. and China, it’s not the U.S. who wins, it’s ultimately one of the United States’ biggest competitors: Brazil.

The Ag Economists’ Monthly Monitor asked, “In the next 10 years, which country ultimately benefits the most from the current trade turbulence?” Seventy-three percent of economists think it’s Brazil, and 18% said China.

This Trade War Could Be Worse Than the Last time
Of the agricultural economists surveyed, 69% say they don’t think a trade war today would have the same impact it did 2018 through 2020. Instead, most think it will be worse.

“The trade war in 2018/19 also had the African swine fever in China. Because of ASF, they did not need the soybeans anyway. It will be hard to figure out what impacted the U.S. markets/prices more, but the market reaction should not be as great this time,” said one economist in the monthly survey.

Ag Econoimsts’ Monthly Monitor

(Lindsey Pound)

“It would be a bigger impact,” another economist said. “The first round of trade wars in agriculture were largely used as a wedge for negotiation or renegotiation of agreements that provided improved access and growth opportunities for ag trade. This round seems to be championed based on reshaping the entire trading system, a system that U.S. agriculture largely benefited from over time.”

“There appears to be less willingness by the U.S. taxpayer to provide financial assistance to agricultural producers. That is not to say that financial assistance is absent this go around, but I do believe it increases the uncomfortable situation for producers who largely support less government spending,” one of the respondents shared.

However, other economists think it could have a similar impact, saying the same commodities will be impacted.

Even talk of tariffs is enough to move the markets, as some analysts argue the commodity markets have been ignoring fundamentals, instead trading headlines recently.

The Potential Economic Hit to Ag
The American Farm Bureau (AFBF) economists recently took a deeper dive into the possible impact of reciprocal tariffs. AFBF economists say of the top 20 U.S. agricultural products currently being targeted by Canada, for a total of $5.8 billion, commodities such as juice, coffee and chocolate are hardest hit, along with wine, fresh fruit, dairy products, poultry and rice.

Canada’s retaliatory tariffs

(AFBF)

China’s retaliatory tariffs

(AFBF )

When it comes to China, Beijing has specifically targeted 15 products including beef, cotton, grain sorghum, pork, corn and dairy along with fresh fruit. Economists say while it’s too early to measure the full impact of the tariffs on U.S. agriculture, they believe it will certainly decrease demand for U.S. products in Canada and China.

Market Facilitation Program 2.0?
If agriculture is caught in the middle of another trade war, the March Ag Economists’ Monthly Monitor wanted to know if economists think USDA will compensate farmers for their losses again, similar to what the previous Trump administration did with Market Facilitation Program (MFP) payments.

March Ag Economists’ Monthly Monitor

(Lindsey Pound)

Even though Secretary of Agriculture Brooke Rollins has promised to make farmers whole through another trade war, economists are concerned about available funding. Seventy-seven percent of economists think USDA will compensate farmers, but 23% don’t think so.

“Congress might be the limiting factor,” one economist said.

“They will want to do so, but their ability to do so may be limited. The failure to include replenishment of the Commodity Credit Corporation’s borrowing authority in the continuing resolution limits available CCC funds, and other options may also be limited in potential scope,” another respondent shared.

“The political dynamics appear to be similar,” said another economist. “Amounts are however likely to be less, maybe substantially less, due to the general policy initiative to reduce government spending.”

The Secretary of Agriculture has come out and said they will use these tools if it becomes necessary.

Tariffs Aren't Going To Be Our Largest Trade Issue

Wed, 08 Jan 2025 20:54:19 GMT

The most overused word in the English language since November has to be the word “tariff” as speculation runs rampant on how much a Trump 2.0 presidency will use this controversial trade negotiation tool.

Here’s a sampling, so you get the idea: “Think About Making These Purchases Before the Trump Tariffs are Enacted”, U.S. News; “U.S. Carmakers Face Rough Ride Under Trump Tariffs”, Bloomberg.com; and “Bourbon Industry Concerned About Looming Tariffs”, LEX18. You know it’s bad when tariffs threaten to make it harder to drink your troubles away!

Tariffs can disrupt almost any industry, but U.S. agriculture has already seen this movie.

During Trump’s first term, according to the USDA’s Economic Research Service, retaliatory tariffs reduced U.S. agricultural exports by $27 billion from mid-2018 when the tariffs were imposed to the end of 2019. Soybeans accounted for the majority of the decline at 71%, followed by sorghum and pork at 7% and 5%, respectively. The losses were primarily concentrated in states, such as Iowa, Illinois and Kansas, exporting these products.

As a result of ag being caught in the cross fire of a new trade war, the USDA allocated $23 billion in trade-aid payments to U.S. producers. However, the rest of the story is that the Trump administration’s tough-line trade tactics ultimately led to the China Phase I deal and record exports to China and record farm income in 2021 and 2022.

That turned out to be short-lived. Even with the Phase I deal still in place, 2024 saw a serious erosion of U.S. agricultural exports to the Chinese mainland. After reaching a high of $36.38 billion in goods in 2022, USDA ERS projected 2024’s final export tally to China was expected to come in at only $23.3 billion.

So What Exactly Went Wrong This Time Around?
One could still blame such an export freefall on some of the tariffs that are still in place. But the truth is that the U.S. is now navigating the most troubled geopolitical waters since the Cold War days of JFK and Ronald Reagan. Simply put, China and Russia—aka the old Soviet Union—are not our friends.

What should be concerning, to those in U.S. agriculture and beyond, is the influence these two countries now have over a multi-country trading alliance referred to as BRICS. That acronym is short for the Brazil, Russia, India, China and South Africa alliance.

The original members of BRICS held their first summit in Russia in 2009 and sought to establish themselves as a geopolitical club to counter the influence of the G7 nations: the U.S., Canada, United Kingdom, Germany, France, Italy and Japan. Their agenda at that first meeting was firmly shaped by the global recession and, therefore, mostly focused on redistributing voting rights in the International Monetary Fund and World Bank in favor of the developing world. One of the most controversial statements to come out of that 2009 meeting was the calling for a new global reserve currency. From that point on, it was clear that the dominance of the U.S. dollar was being put on notice by the members of BRICS.

Today, the trading bloc is the world’s largest by population and accounts for about 37% of the world’s grain. China has been particularly aggressive in strategic moves with countries within BRICS. In 2023, Brazil was China’s largest source of agricultural imports. This movement of agricultural products accounted for more than 50% of Brazil’s total trade with China and 24.85% of China’s overall agricultural imports. No longer are U.S. farmers China’s primary source of imported soybeans or corn.

Real-Life Monopoly
Right now, China is buying up railroads in Brazil plus upgrading and expanding port facilities. Between 2007 and 2022, China invested $71.6 billion in 235 projects carried out in Brazil. The country’s investment and buying spree have been more impressive within the continent of Africa. At present, 53 out of 54 nations in Africa are part of China’s Belt and Road Initiative (BRI), which supports building key infrastructure projects throughout Africa, Asia and Europe. The projects intend to provide improved shipping corridors for precious raw materials and commodities. As of 2023, the two-way investment between China and its BRI partners had reached $380 billion.

If U.S. agricultural exports to China continue their decline, then it won’t be because of the “T” word. It will be because China holds a majority of railroads, utilities and low-cost properties on the world’s Monopoly board. Why buy U.S. soybeans when you can ship them from Brazil on your own railroad to your own port to your own container ship? Same goes for precious metals in Africa or oil in Russia or Iran. If you already own everything but Boardwalk and Park Place, then you don’t need the economies of the West to be involved as you plot your future livelihood.

Time To Take Control
A lot of unknowns exist as the second iteration of the Trump presidency begins. But this is clear. In 2023, the U.S. trade deficit with China was a whopping $279.4 billion. Those are the very dollars subsidizing a railroad somewhere in Brazil or a superhighway in South Africa—all to our own detriment. For the sake of our own future, we must start negotiating trade deals from a position of strength instead of begging for mercy. “Speak softly, and carry a big stick” was Teddy Roosevelt’s mantra during his time as president. When it comes to U.S. agricultural trade, we need Trump to start channeling his inner Teddy beginning Jan. 20, 2025.

Brazil Minister Touts Farm Deals With China Expected Later This Week

Tue, 19 Nov 2024 16:45:24 GMT

Brazil’s Agriculture Minister Carlos Favaro said on Monday that the Brazilian government will announce farm agreements with its biggest trade partner China on Wednesday, ahead of scheduled meetings with Chinese President Xi Jinping.

Xi, who is in the country for the G-20 summit in Rio de Janeiro, is set to hold meetings with Brazil’s President Luiz Inacio Lula da Silva on Wednesday in the capital Brasilia.

The minister noted that the export deals expected to be announced with China will potentially cover fruit, beef and pork, as well as mentioning an updated list of Brazilian meatpackers that could be approved to export to the Asian giant.

(Reporting Rodrigo Viga Gaier; Writing by Isabel Teles and Ana Mano; Editing by David Alire Garcia)

Here's Why Analysts Are Scratching Their Heads After USDA's New WASDE Report

Thu, 11 Apr 2024 21:41:28 GMT

USDA’s monthly look at supply and demand offered a few surprises, including the lack of changes to South America’s crops. The April World Agricultural Supply and Demand Estimates (WASDE) showed larger wheat and soybean ending stocks, but smaller ending stocks for corn.

USDA’s estimates for corn, soybeans and wheat ending stocks all came in higher than what the trade expected.

• Corn ending stocks: 2.1 billion bushels, 50-million bushels lower than last month
• Soybean ending stocks: Up 25 million bushels to 340 million
• Wheat ending stocks: 698 million bushels, up 25 million bushes

“The cut in corn ending stocks have certainly been justified,” says Arlan Suderman, chief economist for StoneX Group. “Cheap prices generate demand, and that’s happening in corn. I think the bigger cuts yet to come are going to be related to added ethanol demand.”

Suderman says if you look at the marketing year to date, ethanol use for corn exceeds the seasonal pace needed to hit USDA’s newly revised target by 98 million bushels.

“We could see that ethanol demand go up considerably, yet we’re still going to be above 2 billion bushels. So I don’t want to get anyone overly bullish on that,” says Suderman.

On soybeans, Suderman says the 25-milion-bushel increase in ending stocks was caused by USDA’s cut to soybean exports.

“I think that was justified, but they continue to hold the line on crush, and I think they’re going to be forced to increase crush,” says Suderman. “And that’s going to pull us back toward that 300-million-bushel ending stocks estimate, still not bullish, but not as bearish as where they currently have us.”

South American Numbers are Suspect

USDA made small changes to South American crop production numbers by lowering corn production in Argentina by 1 mmt. Those revisions were due to drought’s impact on the crop there. USDA made no change to Argentina’s soybean crop estimate.

The agency also made no changes to its forecast for Brazil’s corn or soybean crop size. Chip Nellinger, owner of Blue Reef Agri-Marketing, says USDA’s updated South American crop forecast was the bigger surprise in Thursday’s report.

“To me, the biggest surprise is the lack of changes that we saw from the USDA versus some of the numbers that are coming out of like CONAB and the Rosario Grain Exchange in Argentina. It just seems like USDA has a massive disconnect, still about a 500-million-plus-bushel difference with where CONAB came out on Thursday versus where the USDA came out for the Brazil bean crop.”

Nellinger says the difference in estimates is also leaving traders confused.

“It is going to have a direct influence, no matter what the crop size is on our exports. I think there’s still some unknowns out there as far as what the ultimate crop size is in the Southern Hemisphere,” says Nellinger.

What Now?

Now that USDA’s April report and the Prospective Plantings report are both out of the way, Nellinger says the market will shift its focus to planting and the weather forecast in the U.S. Currently, it’s a story of the East versus the West, with dry conditions continuing to consume the areas west of the Mississippi. In the east, more rain means not as much planting is underway.

“It was this way last year, as well,” says Nellinger. “You look at the drought map that came out this week, even though there were some decent rains around there in the western Corn Belt, it’s still a worse setup at this point in the calendar than what we had in 2012. I’m not saying we’re going to have a repeat of the 2012 growing season weather, but there needs to be some regular rainfall in that western Corn Belt during the growing season.”

Nellinger says the dry weather will initially be a bearish factor for the grain markets due to the quick planting pace, but he says there’s a tremendous amount of uncertainty about how the weather could shift during the growing season.

“Just add on about the wheat. We’re going to need some rain in the Black Sea area and in Russia, and we’re going to need rain in the Southern Plains to get the wheat crop worldwide across the finish line,” says Nellinger. “So, there’s still some question there. And then when you look at how planting is going and this line of what La Nina will mean to summer temperatures and rainfall, especially the western Corn Belt. There’s just a tremendous amount of uncertainty going forward.”

2023 Crop Production Déjà Vu? USDA's Latest Report Shows Brazil's Crop Isn't A Disaster, Despite Crippling Drought Early On

Fri, 08 Mar 2024 21:16:38 GMT

Despite drought and weather concerns to finish 2023, South America is still sitting on a big crop. USDA’s latest WASDE report released on Friday made minor revisions to the South American crop production estimates, and even raised the corn production estimate in Argentina.

In the March WASDE report, USDA made the following revisions:

Cut Brazil’s soybean production estimate by 1 million metric ton (mmt) to 155 mmt.
No changes to the Brazilian corn crop estimate of 124 mmt.
No changes to Argentina’s soybean production estimate of 50 mmt.
Raised Argentina’s corn crop estimate by 1 mmt to 56 mmt.

The biggest controversy was the fact USDA didn’t make larger cuts to the Brazil soybean production estimate, as the 1 mmt drop was less than what the trade expected.

“As you look at this particular report, those were the only numbers that people were really watching,” says Mike North of Ever.Ag “So, for them to not make a change, I think it was kind of upsetting the applecart in terms of expectations, but likely more to come.”

North says boots on the ground estimates suggest there’s more room for cuts, with North estimating another 4 mmt to 5 mmt could be trimmed from Brazil’s soybean estimate.

“I think the question the market is still trying to answer is, what extra growth do we maybe have to add to Argentina? And then how do we balance an Argentine crop that’s twice the size of last year against a less than record crop coming out of Brazil,” says North.

Not every private firm thinks the crop in Brazil is getting smaller. StoneX Group released its recent survey from Brazil, raising its forecast for Brazil’s 2023-2024 soybean crop by 1.5mmt to 151.5 mmt. That’s still lower than USDA’s current estimate for Brazil soybeans of 155 mmt.

“It’s the old story with these grains now. They have the genetics. They just wait for the rains, and while they’re waiting, the crops look terrible. When they get two inches of rain, all of a sudden, they’ve got a pretty good crop, and they’ve had decent rain since then,” says Mark Gold of StoneX Group. “So, there’s no reason to think that they’re not going to wind up with a pretty good crop. Is it 155 [mmt] or 156 [mmt]? I don’t think so. I think we’re much closer to 150 mmt or 151 mmt than anything else. But we’ll see where we go.”

Brazil exported 6.610 mmt of soybeans during February, according to official government data. That was up 3.755 mmt (118%) from January and 1.593 mmt (31.8%) more than last year given the rapid soybean harvest.

U.S. and World Ending Stocks

USDA made no change to the U.S. ending stocks figure, except for wheat. North says exports from the Black Sea region have been remarkable, especially from Ukraine.

“That becomes the one-two punch,” North says. “Now you add in these extra bushels coming out of South America as they’ve gotten the good weather Mark alluded to, and you walk into another U.S. growing season. Balance sheets, globally, look really, really full and that ultimately sets the stage for this lower market that we’ve been in and really kind of justifies market action over these last couple of months, as we’ve really put to bed the South American story.”

North says when you add the extra layer of additional Ukrainian volume, along with 5 mmt of wheat coming out of Russia in the next marketing year, it’s another layer in the overall global grain supply glut story.

“There’s going to be ample supplies of grain available in the world market,” North says.

China Cancels Wheat Purchase, Yet Wheat Seems Unfazed

USDA pointed to poor exports in the latest WASDE report, but there’s another piece of bad news for the wheat market this week. On Friday, USDA reported a SRW sales cancellation from China of 110,000 metric tons during the 2023/2024 marketing year, which marked the second straight day of cancellations.

“Isn’t it interesting that we had two cancellations, one on Thursday and one on Friday, but the wheat market, as we sit right now, is looking at a key reversal and it made a contract low overnight,” Gold says. “So, this market rejected bad news, if we see this higher close, and I believe the markets may have certainly seen the bottom in here.”

He says now the key is what the funds do, as the funds still hold short positions.

“If we can just get the funds to pull the trigger and come cover some of these massive short positions, which they started to last week in the corn - they covered about 50,000 corn - but there’s a lot more yet to come and that can lead us to some higher prices,” Gold says.

What Spurs the Funds to Exit the Short Positions?

As Gold mentioned, the funds are extremely short. So, what will it take to get the funds to exit those positions? North says in today’s day and age, when the geopolitical events continue to surprise the world, there are several things that could cause the funds to change and bring some bullish excitement back into the market.

“It could very well be some of this strong job growth that we continue to show, and some of the ultimate strength in the economy, which raises this inflation story some more and maybe starts bringing them back into the mix to use commodities as the inflation play,” North says. “But I think the one bandwagon everybody is hoping on is weather.”

North says the current drought map shows the U.S. remains dry.

“I think there’s going to be some patience around that story, given the way the crop performed last year following a very hot and dry June,” North says. “And so it’s an unknown factor right now. But it’s going to take something large, it’s going to take something unknown, something like weather, to develop further and become a real threat.”

Could Drought Cause Brazil to Lose its Top Spot as the Largest Corn Exporter in the World? Economists Weigh In

Mon, 05 Feb 2024 17:16:41 GMT

Agricultural economists have little doubt about Brazil remaining the world’s top exporter of soybeans for 2023/24; however, the corn export outlook is a bit murky with potential production problems for the safrinha corn crop casting doubt on Brazil holding on to the top spot in corn.

Dry weather toward the beginning of the growing season didn’t dampen Brazil’s soybean exports. New numbers show Brazil’s soybean exports for the first four week of January reached a new record of 2.6 million tons.

According to the January Ag Economists’ Monthly Monitor , it’s a trend that could continue, despite projections for lower production. The survey of nearly 70 ag economists from across the country found 93% of ag economists say Brazil will remain the world’s largest exporter of soybeans this year.

“On the soybean side, that was a clear indication that Brazil would continue to be the lead exporter of soybeans,” says Bill Lapp, founder and president of Advanced Economic Solution and a respondent in the January Monthly Monitor. “They’re increasing their acreage, there’s a rebound there, so even with poor weather, there’s going to be a recovery in their production. Corn is more iffy, and it will depend on the final, second crop there, the suffering of crop and how that ends up.”

The January Ag Economists’ Monthly Monitor revealed economists’ views were more mixed on corn. Forty-three percent of economists think Brazil will remain the world’s top exporter of corn, and 21% disagree. University of Missouri ag economist Ben Brown says it’s Brazil’s title to lose, and it all hinges on timing.

“I think weather is playing into that uncertainty, maybe more on the corn side: What’s the crop in Brazil look like at the end of the day? And some stronger corn exports out of the United States maybe made that not quite as easy of an answer as it’s been for soybeans,” Brown says.

While the planting season has just started for the safrinha corn crop, it’s the bigger production generator in Brazil. Farmers in Brazil plant corn year round, but the safrinha crop accounts for 70% to 75% of the country’s production each year.

Krista Swanson, lead economist for National Corn Growers Association (NCGA) points out it’s still early, as Brazilian farmers are just now beginning to plant the safrinha corn crop in Brazil.

“I think that all eyes are on what actually happens with that safrinha corn crop,” Swanson says. “Weather dictates how many acres get planted, I think as we also look at where prices are right now, do those farmers have an economic incentive right now to even plant corn as a second crop? I know some of some of those farmers, last year, were selling that second crop at a loss. And so if you’re that farmer making that decision, you’ve got a lot to weigh. You’re potentially getting it planted later than normal, and then you know that the price isn’t there to really drive those additional acres.”

Swanson says that’s why the market is watching the situation closely, to see how weather impacts planting and if farmers plant as many second crop acres as intended.

Related Stories:

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Worst-Case Scenario: Why Eric Snodgrass Thinks The Heavy Rainfall In Brazil Could Do More Harm Than Good

Mon, 08 Jan 2024 15:58:14 GMT

Sinking soybean prices have been the theme to start the new year. One reason behind the price pressure is bearish news of rain returning to key growing areas in South America that had been impacted by severe drought. However, one leading ag meteorologist thinks this rain could do more harm than good at this point in the season, even impacting the planting of the safrinha corn crop.

Eric Snodgrass, science fellow and principal atmospheric scientist with Nutrien Ag Solutions , says the wet weather is a sudden switch from the drought that plagued a vital soybean and production growing region at the end of 2023.

“For the last three months, we’ve seen incredibly dry conditions throughout the center-West region,” says Snodgrass. “We had episodes of heat pushed the late planting off quite a bit. And now we’re seeing the models really make a pretty substantial flip over to much wetter conditions.”

Join us Feb. 5 to 7 in Kansas City for Top Producer Summit . This is the leading networking and education event! Eric Snodgrass will present a general session: High Impact Weather And Production Agriculture”

Snodgrass says forecasts point to as much as 8 inches to 10 inches of rain in a span of two weeks. While the rain is needed, it could actually do more harm than good.

“To be honest with you, I think this is a worst-case scenario, compared to if it had just stayed drier,” Snodgrass says. “What I mean by that is you bring in all that rain, it’s going to impact some early harvests. But what happens if all of that moisture begins to get recycled? In other words, it sticks around and that makes things wetter for a while. Now, all of a sudden, you start pushing back the harvest time period. And that’s going to just keep pushing that crop calendar such that the safrinha corn crop goes in late.

The next 5 days across S America. Wednesday morning global output. pic.twitter.com/a8rmJ1tTrW
— Allen Motew (@QTweather) January 3, 2024

Snodgrass says El Niño reached its peak at the end of December. Now, what’s called the Madden–Julian oscillation (MJO) is riding on top of El Niño, which is pumping tropical moisture into Brazil and increasing farmers’ chances there for heavy rainfall and continued rain events.

“Basically, we opened it up finally to getting moisture into place from the tropics and, therefore, it’s going to start raining and raining pretty heavily,” says Snodgrass.

January May Be Yield-Defining Month for South American Weather

Fri, 29 Dec 2023 19:21:10 GMT

According to the meteorologists at BAMwx , the upcoming month in Brazil could be comparable to this past August for U.S. soybeans.

“The next three, maybe four weeks or so are warming up quite a bit in Central Brazil and drier too,” says Kirk Hinz, BAM meteorologist and president of business development.

Hinz adds if the area had seen favorable conditions until this point, the month ahead may not be as critical. But Central Brazil has been facing above average temperatures and isolated, scattered rainfall.

“We’re going back into that same pattern that kept us hotter and kept us drier – there’s a problem,” he says. “I am definitely concerned.”

The hotter, drier tendencies are a result of a strong El Nino weather pattern – which has the potential to stick around.

“Typically, El Nino starts to weaken as we get into the early part of the year,” Hinz says. “The weather models are going to have to adjust to this El Nino because it’s so strong it’s going to last a little bit longer. It’ll naturally decline some but to the extent of what the weather models say – I don’t think it’s going to happen.”

Just how quickly the effects of El Nino will decline is also an important factor for the North American growing season.

“The speed of the decline is really going to be the biggest thing for North America as we work into the planting and growing season,” says Bret Walts, BAM’s chief communications officer. “Historically, if you do end up on the slower side of things, you can get a pretty wet start.”

January is expected to show signs of the likelihood for a repeat of the 2019 planting season.

“I think the next month really is going to be critical to see if there’s any movement. If not, you’re probably leaning a little bit more on the wetter side of things,” Walts says. “To be completely honest, we’re riding the line right now based on the speed that we’re currently seeing of potential decline down the road.”

To hear more on this topic, as well as when the U.S. may start to see more wintery weather, listen to the AgriTalk podcast .

It's So Dry in Brazil, Some Farmers Have Replanted Soybeans Three or Four Times

Fri, 01 Dec 2023 21:21:06 GMT

South American weather continues to be the big market mover. Soybean prices sank on Friday due to forecasts for possible rain in Brazil.

Dan Basse of AgResource Company , says even with the forecasts, global weather is a concern for the markets, and it’s something that could continue to be a catalyst in the weeks ahead.

“We’ve got this drought going on in northern Brazil, the Amazon River is at a record low. This would need to go on to continue to impact the markets. We’ve only got 80% of the soybean crop in the ground as we see it today. So, as we think about the future, it’s very key, but the month of December in January weather will determine how bad is bad,” Basse says.

With intel from the AgResource offices in South America, Basse has heard farmers are already being forced to replant crops–sometimes more than once.

“I have some Brazilian farmers that have replanted first crop corn, and they replanted soybeans maybe three or four times. So it’s a problem we need to watch,” he says.

If the drought continues to plague the area, Basse says the crop size would need to decline significantly more than forecasts today in order for the grain markets to believe there’s a crop production problem.

“We [AgResource] started out with a crop forecast in Brazil of 163 million metric tons on beans, and our team being in the fields say we are down to 156 million metric tons,” Basse says. “We would need to get under 151 or 150 million metric tons if I’m really going to get the bean and meal market going even more. Soybean meal already has a bid today because of last year in Argentina. But it’s things that should keep you up at night, weather globally and in Brazil today is not normal.”

Why You Should Care About South America

Weather, and the effects on the crop, are a growing focus for the market. Brazil has dominated the soybean export market for several years but is now also the largest exporter in the world for corn.

According to Jon Scheve, president of grain at Superior Feed Ingredients, soybeans in South America are grown on a long north-south axis, which means they are planted and mature at very different times. In the U.S., crops are grown more on an east-west axis where planting and maturing dates are more similar throughout the growing region.

“South America’s soybean planting window lasts nearly four months; in the U.S., it lasts about six weeks,” Scheve says. “Because of Brazil’s north-south axis, some fields in the southern part of the country could be planted on the same day fields in the north are harvested.”

When it comes to weather, the vast growing region in South America means there are areas experiencing drought while others deal with too much rain.

“Mato Grosso is probably the most important region to watch because it produces nearly 10% of the world’s soybeans, or the equivalent of Illinois and Iowa’s production combined,” Scheve explains.

Here are four reasons farmers should care about South America , including the timing of the crops and the scope.

El Nino's Effect on Crop Prices

Tue, 14 Nov 2023 15:00:00 GMT

A rebound in South American crops has been anticipated by traders for a long time. The focus for months has been the “big” crop coming in the southern hemisphere and the competition U.S. soybean farmers could suffer.

Recent WASDE reports had assumed another record Brazilian soybean crop and Argentina returning to normal, but the El Niño weather pattern might have something to say about that.

El Niño causes the waters of the Pacific Ocean to warm and normally has an impact on the world’s climate. In Brazil, it usually brings a drier climate in the north and northeast and rain in the south. The effect in Argentina is a wetter year beginning with a wet spring (Sept. to Nov.)

The table below reflects the potential for an increase of 31 million metric tons (mmt) or about 1.2 billion bushels. WASDE has recognized the importance of the U.S. losing exports to a whopper crop by lowering U.S. exports this year to 1.76 billion bushels. This is compared to the past three years of exports at 2.26, 2.16 and 1.99, respectively.

Yet when supplies from all sources are put into WASDE’s global supply and demand tables, U.S. carryout is seen as 245 million bushels or about 6.5 mmt. The importance of El Niño becomes apparent.

Change in Perspective
Total 2023/24 production in Brazil and Argentina is seen at about 211 mmt. The U.S. carryover of 6.5 is only 3% of that total. If Brazil would have an El Niño production comparable to last year’s record, the 7 mmt shortfall would offset the U.S. total carryover. Suddenly, the perspective changes.

Sources in Brazil say crop potential has already been reduced by 2 mmt to 3 mmt. Further implications for replant and delayed planting suggest supplies out of Brazil will, at a minimum, be delayed.

As a result, this delays the country’s safrinha corn planting and affects their yield by 2 mmt to 3 mmt as well. Reductions due to too wet and too dry conditions is yet to be determined but is currently on the radar of global traders.

Market psychology is a big part of price discovery on a day-to-day basis. Price adjustments come quick and pronounced as well. While corn and wheat gave back all their gains realized in the two-year bull market, soybeans managed to lose only 50%.

The reason is there are only two producers who share nearly 100% of exportable supplies. For corn, there are four: the U.S., Argentina, The European Union (EU) and Ukraine. There are seven major producers of wheat: the U.S., Canada, Ukraine, Russia, EU, Australia and Argentina with India as a smaller exporter.

Generally, when a major exporter has a problem with exportable supplies, other players make up the difference. Everyone grows some wheat, but most must import some. With two big exporters of soybeans, the implications are huge, and a reduction in exportable supplies by one can significantly affect price.

Market perception (psychology) can be under appreciated when it comes to price discovery.

4 Reasons Why You Should Care About South America

Wed, 08 Nov 2023 21:58:53 GMT

Why should farmers in the U.S. care about South America? Here are four reasons, says Jon Scheve, president of grain at Superior Feed Ingredients:

1. Planting and/or harvest happens almost year-round in South America.

2. Because of South America’s vast crop production geography, it’s easy to misinterpret weather reports.

3. Most of Brazil’s second corn crop is exported and directly competes with the U.S. crop.

4. While average corn yields are lower in South America versus the U.S., they are steadily increasing.

In South America, soybeans are grown on a long north-south axis, which means they are planted and they mature at very different times. In the U.S., crops are grown more on an east-west axis where planting and maturing dates are more similar throughout the growing region.

“South America’s soybean planting window lasts nearly four months; in the U.S., it lasts about six weeks,” Scheve says. “Because of Brazil’s north-south axis, some fields in the southern part of the country could be planted on the same day fields in the north are harvested.”

When it comes to weather, the vast growing region in South America means there are areas experiencing drought while others deal with too much rain.

“Mato Grosso is probably the most important region to watch because it produces nearly 10% of the world’s soybeans, or the equivalent of Illinois and Iowa’s production combined,” Scheve explains.

The states of Parana and Rio Grande do Sul in southern Brazil are also important to watch, he adds. Combined, they are as key as Mato Grosso, but the two regions have different weather patterns. When Parana and Rio Grande do Sul are dry, Argentina, Paraguay and Uruguay are likely experiencing the same, which all told have double the growing acres as the entire U.S.

Is Brazil's Upcoming Growing Season Shaping Up to Be a Mess?

Fri, 01 Sep 2023 18:48:21 GMT

Every now and then farmers glance down to see what’s happening below the equator. By “below the equator,” I mean Brazil.

We have gradually resigned ourselves to Brazil being the leader, but last year they also took the top spot for corn exports, a tougher fact to swallow. But there is more going on down there. For example, while we have been coping with the effects of the new El Nin o, it’s going to mess with the 2023-2024 growing season downstairs as well.

The Economist provided a helpful chart to predict the weather patterns climate models are currently offering. This map notes wetter, drier and warmer regions of South America. Maybe there weren’t any cooler-than-average areas, or with the continent straddling the equator, cooler is a relative term with less meaning. Anyway, if we’ve learned anything this year, warmer than average can mean way hotter for way longer.

I noticed a couple of curious things. Bolivia is predicted to enjoy both drier and wetter-than-average conditions during the growing season. Overall, it could be a tough growing season for Brazil, with heat in the south and most of the country possibly drier much of the time. The strength of the current El Nino coupled with already record warm ocean temperatures suggests the headlines will just keep coming from the south.

Meanwhile, something weird is going on in the Antarctic. Basically, it’s losing ice, whole countries of it — the ice loss divergence from average compares with Argentina or Texas. I find those analogies unhelpful, merely planting an image of Argentina floating around in the ocean in my head.

This year the sea ice minimum broke the record that had stood since ... last year. Some of us have been zeroed in on the North Pole, since it’s all ocean, and Antarctica had been relatively stable as far as ice was concerned. Until recently, anyway.

I have no dramatic conclusions to draw from these maps, but just like the record low temps in Australia during their winter, they suggest to me the U.S. Corn Belt was part of the fortunate few places to avoid the most intense weather this growing season. So far.

Brazil Clears Bottlenecks to Oust US as Top Corn Exporter

Thu, 24 Aug 2023 16:46:18 GMT

Brazil is set to overtake the U.S. this year as the world’s top corn exporter, reflecting both a bumper harvest and logistical breakthroughs such as the consolidation of northern export routes, which are boosting the competitiveness of the South American grains powerhouse.

Corn exports through Brazil’s northern ports, which use the waterways of the Amazon River basin to ship grains globally, are on track to beat volumes via the most traditional port of Santos for a third consecutive year, according to a Reuters analysis of grain shipping data.

The shift underscores how Brazil, which churns out three corn crops per year and still has huge expanses of under-used farmland, is finally overcoming some of the infrastructure bottlenecks that have long made it hard to get its bountiful harvests to global markets.

That and a new supply deal with China announced last year suggest Brazil may be opening a longer era of supremacy over U.S. corn exports, unlike the last time the Brazilians briefly grabbed the global corn crown during North America’s drought-hit 2012/13 season.

The improved export capacity helped Brazil to fill gaps in the global corn market amid disruptions from the war in major grain exporter Ukraine and trade tensions between the U.S. and China.

“We celebrated a lot ... when (corn export) volumes via northern ports equaled Santos,” said Sergio Mendes, head of Brazilian grain exporter group Anec. “By using northern ports ... you are saving 20 reais ($4.12) per ton (of corn).”

Major new investments in Brazil have begun to ease several chokepoints and bring down logistics costs sharply, helping to undercut U.S. farmers.

Northern export routes in particular have benefited from a 2013 law that encouraged grains traders such as Cargill and Bunge, and barge operator Hidrovias do Brasil, to build out new private-use port terminals (TUPs).

Their transshipment stations on the Tapajos and Madeira rivers have linked up the heart of Brazilian farm country and up-and-coming Amazonian ports such as Itacoatiara, Santarem and Barcarena.

The Tegram grain terminal at Itaqui, built and operated by foreign and Brazilian grain merchants including Louis Dreyfus Commodities and Amaggi, boosted its grain export volumes by 306% in eight years to more than 13 million tons in 2022, according to data provided by the firms.

The TUP legal framework, unlike a traditional concession for a limited period, has unlocked a wave of long-term port investments in Brazil. Some 39 billion reais ($8.0 billion) have poured into building and expanding 112 new private-use terminals under the new law, according to a 2020 study by Brazil’s TCU federal audit court.

Brazil’s farm industry, however, is not past all of its logistical woes. On-farm storage capacity still pales next to rival grain powers like Canada, the U.S. and Argentina.

In the No. 1 grains state of Mato Grosso, the storage gap had surged to 46 million metric tons, according to state government data through 2021, after the annual corn harvest tripled in a decade to over 90 million tons, faster than new silos could be built.

A lack of storage space means Brazilian farmers are forced to quickly sell their harvests or pile their corn outside warehouses and hope for good weather. As a result, much of the Brazil harvest crowds onto the roads during a narrow seasonal window, which can make for expensive traffic jams.

Cheaper Route to China

The new export capacity has helped grains shipped from Brazil’s northern ports to compete on logistics costs with U.S. farmers.

Shipping a ton of soybeans in 2008 from Iowa to Shanghai was 77% of the price of using Brazil’s northern ports, but by March 2023 it was 5% more expensive shipping it from the U.S., according to U.S. Department of Agriculture and Brazil’s ESALQ-LOG data. For corn, freight values are very similar, says Thiago Pera, logistics research coordinator at ESALQ-LOG.

The Amazon basin has also become competitive with the southeastern port of Santos, long the powerhouse of Brazilian grains exports. Some 37% of Brazil’s total corn exports flowed through Barcarena, Itaqui, Itacoatiara and Santarem ports in the first half of 2023, according to Brazil’s crop agency Conab. Just 24% flowed through Santos.

By comparison, Santos exported almost three times more corn than those four northern ports in 2015, before heavy investments expanded port capacity in the Amazon region.

“The greater share of shipments through northern ports reflects cheaper freight costs compared to routes to the ports in the south and southeast,” said Thome Guth, a Conab official.

Conab forecasts Brazil’s 2023 total corn output at nearly 130 million metric tons, the highest ever, and exports reaching 50 million metric tons for the first time.

Corn futures in Chicago have fallen from a 10-year high in April 2022 to a two-and-a-half-year low this month, in part due to ample supplies from Brazil.

Brazil’s surging export infrastructure shows little sign of letting up, even though lower prices may discourage farmers from expanding plantings as rapidly.

Chinese state-owned trader COFCO is now building a major new grains terminal at Santos after getting a 25-year license to operate a unit with capacity for 14 million tons. Shipments from COFCO’s STS11 terminal are scheduled to begin in 2026.

A highway license issued two years ago has also modernized a key Amazonian grain corridor stretching over 1,000 kilometers (625 miles) from Mato Grosso to ports in Para state, known as BR-163.

For years, caravans of grain trucks would get stuck regularly in deep mud on that road when they got caught in the rain on their way to northern ports.

Major rail projects still face an array of bureaucratic obstacles, but a few have gotten off the drawing board.

Brazil’s largest rail company Rumo just finished an investment of 4 billion reais on the Ferrovia Norte Sul, started in 2019. The line connects Santos port to farm states Tocantins, Goias, Minas Gerais and Mato Grosso, reinforcing another key route to get Brazilian harvests to global markets.

($1 = 4.8769 reais)

(Reporting by Ana Mano; Editing by Brad Haynes and Marguerita Choy)

Brazil is Short on Bin Space As Grain Output Outpaces Storage Capacity

Thu, 20 Jul 2023 19:27:25 GMT

Brazil’s grain output dramatically outpaces storage capacity

The 2022/23 crop season could post two records in Brazil. First, it could produce a record 313 million tons of soybeans, corn, cotton, rice and wheat. Second, that record production would cause a record storage deficit of more than 100 million tons.

“Storage capacity growth since 2010 has not been proportional to increases in crop production in the same period,” says Joana Colussi, postdoctoral research associate at the University of Illinois.

Only 15% of Brazilian farms have warehouses or silos. In 2021, Brazil’s storage capacity could only contain 67% of its total grain production. In 2010, the ratio was 90%.

The grain storage deficit in Brazil is concentrated in the central-west states (Mato Grosso, Goiás, and Mato Grosso do Sul), which account for almost half of the national grain production.

“Although public and private credit is available for building warehouses, Brazilian producers still need to be convinced about the positive return on this type of investment,” Colussi says. “This situation can represent a risk for future Brazilian agriculture competitiveness.”

From the war in Ukraine to evolving Chinese demand to bumper crops in South America, the trends are shifting for global grain flow. What will the future hold? That will be the topic of a panel at Top Producer Summit.

Global Grain Shuffle: Is The End Of U.S. Grain Export Dominance Near?

Thu, 20 Jul 2023 18:45:25 GMT

It didn’t start with the swing of an ax in the Amazon or by an explosion in Kiev. While both of those contributed, the shift happening in global grain flows is a multifaceted prism through which the picture of the future of grain delivery is continuing to evolve.

“This year, Brazil could take the crown of being the world’s largest corn exporter,” said Dan Basse, president of AgResource Company . “It took that crown for soybeans back in 2017.”

Global Acre Increase

This feat was set in motion by the U.S. drought in 2012 as higher prices encouraged more acres and pushed buyers to seek alternative supplies. While Ukraine has helped to fill some of that demand, the ongoing war and consequential infrastructure damage will make it hard for Ukraine to reclaim former volumes for some time.

“Ukraine, no matter what happens with the war from here forward, optimistically we’ll probably see corn and sunflower production 40% to 50% below normal,” Basse says. “The corn crop will probably be in the range of 18 million metric tons (MMT) or 20 MMT.”
Of course, that’s only possible if the negotiated shipping corridor remains open and transport vessels are willing to haul grain to its destination.

“It’s exceedingly unlikely Russia will pull out of this agreement simply because their allies, China, India and Iran, have a strong interest in keeping feed grains flowing,” says Matt Roberts, senior grain analyst with Terrain .

All Eyes on Wheat

As Ukraine’s production sputters amid war, labor shortages, high fertilizer prices and diesel near $30 per gallon, other countries will help make up the shortfall. Wheat will come from the EU, Argentina, the U.S. and Russia.

“The Russian wheat crop is a record over 100 MMT, and they’ll be exporting wheat at a cheaper price than us,” says Steve Freed, vice president of grain research at ADM Investor Services .

“If Russia has a crop problem, there will be a story in the world wheat market,” Basse adds.

Expanding acreage beyond U.S. borders, Freed and Basse agree, will continue to drive up supplies and drive down U.S. export demand.

“We think Russia could easily add 18 million acres for next year and Brazil could also add 18 million acres next year and not really affect the Amazon,” Freed says. “While environmentalists in Washington wants to add 3 to 4 million acres to the CRP.”

Soybean Spotlight

The juxtaposition of potential acreage contraction leveled against a new demand driver in renewable diesel and sustainable aviation fuel has expanding crush plants searching for more soybean acres, not less.

“The Renewable Volume Obligation (RVO) RVO came down from EPA in December and so we now think we’ll need somewhere between 14 million or 15 million additional soybean acres by 2026,” Basse says. “As we look at the last half of the year, we think soybean oil will make new all-time highs.”

As soybean oil prices and demand drives higher, Basse expects it to impact planting decisions in 2024. The result will be a burgeoning domestic market for soybeans and big exportable supplies of soybean meal.

“As renewable diesel comes online, our share in world soybean trade is declining,” Basse says. “This year, our share is only about 11% and when I first got in this business 44 years ago it was 64%.”

Freed agrees, expecting the trend to be lower U.S. grain exports due to a record crop in Brazil. That big potential matches the big demand from the world’s No. 1 soybean buyer, China. Roberts says we’ll still sell China soybeans, it will just come in the form of livestock protein.

“As China, India, Indonesia and other developing countries become wealthier it’s not just about eating more,” said Roberts. “It’s about eating better and that means moving up to better cuts of meat and animal protein.”

These analysts predict, the only constant in today’s global grain flow picture is change.

“The 2022 rally was all about lower supplies,” Freed says. “2023 is going to be about lower demand as prices try to compete with the fact that all these other origins are now cheaper than us.”

Soybean Harvest Is Just Beginning in Brazil. Here’s What the Crop Looks Like

Fri, 20 Jan 2023 23:04:15 GMT

The AgResource team has been on the ground in Mato Grosso, Brazil this past week. Here’s a summary of their findings from the soybean rows.

A large Brazilian soybean crop will be harvested in the next 30 to 45 days, and most likely USDA, CONAB (the National Supply Company, a public company under the Ministry of Agriculture, Livestock and Food Supply in Brazil) and private analysts will be forced to raise Brazilian soybean production estimates by 1 million to 3 million tons (37 million to 110 million bushels). A crop of at least 150 million tons versus 129.5 million last year is guaranteed.

AgResource’s final yield estimate in Mato Grosso, by far the country’s largest producing state, is 60.3 bu. per acre after revisiting possible harvest losses and disease pressure. This is 8 bu. per acre more than CONAB’s current forecast.

Their final stop of the tour in Cuibá, Mato Grosso, the state’s capital, included a visit to an organization called IMEA, which monitors and collects data on all things agriculture in central and western Brazil. IMEA reiterated they, too, are finding yields above expectations.

There will be yield loss in the far south of Brazil, but yield gains in Mato Grosso and surrounding states will more than offset any yield hit.

Harvest losses will likely result from new incurable (for now) diseases. Local farmers suggest it will be a challenge for final yields to exceed 60 bu. But there is very little doubt a massive Brazilian soybean crop will be available to the global marketplace in the coming weeks. Dry weather in Mato Grosso over the next 5 to 7 days will allow harvest, statewide, to reach 6% to 8% complete this weekend. Additionally, safrinha corn planting will occur on a timely basis.

U.S. producers must acknowledge that Brazil will intensely compete for world market share in 2023. IMEA also shared data with AgResource that indicates the area dedicated to soybean production might double over the next decade. Studies show a large portion of Mato Grosso’s current pastureland is conducive to soybean production. With expanded soybean area comes larger safrinha corn production. Price, costs and currency will determine just how quickly expansion occurs, but Brazil does have the ability to help meet larger global soybean, meal and oil consumption over the next decade.

Day by Day Recap

In central Mato Grosso, soybeans generally have high yield potential. On day one of the crop tour, pods per plant ranged from 65 to 182 with yield estimates from 40 bu. to 67 bu. per acre. Harvest is 10 to 14 days away.

In Sorriso, soybean yield will likely hit or exceed record high, but there are a few concerning spots, particularly 250 hectares (620 acres) on the fourth stop of AgResource’s tour. It’s been much wetter than average in central Mato Grosso since Dec. 1, with precipitation ranging from 15.2” to 16.0”, or 105% to 140% more than normal. Standing water is present. The pod-per-plant count was as low as 12, with beans capped at just two per pod. Yield is estimated at 7 bu. per acre.

Harvest has begun but is 8 to 10 days behind schedule.

Day two in Novo Maringá and Ponte de Pedra featured much better yield potential, but confirmation Mato Grosso is struggling with unknown diseases and currently no solutions. Coupled with excessive cloudy days and rainfall, yield potential has been capped but a record crop is still expected.

Stop one featured an average pod count of 76 per plant and an expected 70 bu. per acre yield. However, it’s clear disease has made the pods at the bottom 15% to 20% of the plant unviable. Agronomist Rafael Mandarino suggests pod loss of 10% was probable, which could lower yield to 63 bu. per acre.

Stop two showed further improvement despite disease issues causing probable pod abortion at the lower end of the plant or breakage of stems. AgResource notes that these are two separate diseases. Stop two featured an average pod-per-plant count of 46. Yield is estimated at 70 bu. per acre amid general uniformity.

On the remaining stops of the day, average pod-per-plant count ranged from 53 to 75. Yields ranged from 60 bu. to 80 bu.

To end the day, the AgResource team made their way to a field in Ponte de Pedre, a rather remote area between Nova Moringá and Campo Novo do Parecis. This field was planted later but will still likely be harvested in the next 20 to 25 days (remember defoliate is used). Yield potential is excellent. Pods-per-plant totaled 75. It’s early to say much about yield, but 70 bu. to 75 bu. per acre is possible with drier weather in late January and early February.

Harvest, which is ongoing, will accelerate this week. Combines and safrinha corn planters are active.

On day three, the AgResource’s tour went from Campo Novo Parecis to Cuibá and found mixed results but again validated USDA’s Brazilian soybean production forecast of 153 million tons (5.6 billion bushels, a record) is close. There might be upside potential to only 154 million, but this week’s tour strongly suggests a crop of 150 million tons or better is nearly assured.

Stop one, in Campo Novo Parecis, featured decent pod counts and general uniformity, but also signs of disease, which likely will impact yield at harvest. The average pod-per-plant count was 40. Yield is estimated at 55 bu. per acre, a bit lower than the 60-plus bushels seen in areas farther north and east.

Stop two, in Seringal Tres Lagao, featured an average pod count of 50, though the majority had only two beans. Yield is estimated at 51 bu. per acre. Farmers reported challenges during early planting – the wet season was rather slow to evolve in portions of Mato Grosso – but otherwise there are no major issues. Harvest will begin in this region in 10 to 12 days.

Stop three, in Caju, showed massive improvement, which will likely push Mato Grosso’s soybean yield above CONAB’s current estimate. The average pod count was 65. Approximately 80% of the plants had three-bean pods. Yield is estimated at 71 bu. per acre. Development in this area is a bit delayed. Harvest is expected in the first half of February.

The southern edge of Mato Grosso’s soy belt will perform best. Stop four, in Manoel Laje, featured plants roughly 4 feet tall and very, very green. This field, too, will be harvested in the first half of February but above-trend yields are guaranteed. Pods-per-plant averaged only 42, nearly all of which were three-bean pods. Yield is estimated at 65 bu. per acre.

Everything’s Bigger in Brazil: The Country Is Poised To Set A Grain Production Record

Tue, 08 Nov 2022 18:52:24 GMT

Brazil has more arable land than any other country in the world. It’s also a top-five producer of 34 agricultural commodities, per USDA. As Brazilian farmers start to plant this fall, forecasts show the 2022/23 crop harvest could be the largest ever.

For the upcoming crop season, CONAB, the country’s statistics agency, forecasts Brazilian production will top 312 million tons of soybeans, corn, cotton, rice and wheat. That is 15% higher than last season, when Brazilian farmers harvested an all-time high of 271.4 million tons of grains.

“There’s no reason not to expect the same trend of higher production in the future,” says Gary Schnitkey, Universi-ty of Illinois Extension agricultural economist.

PROFITS PUSH ACRES

Several factors are behind the increase. “High prices and profits last season, coupled with the depreciation of the Brazilian currency relative to the U.S. dollar, have motivated farmers to increase acres,” says Joana Colussi, academic researcher at the University of Illinois.

Similar to U.S. farmers, Brazilian farmers are facing higher input costs. For soybeans, some farmers are seeing a 40% to 50% increase from last year, says Daniele Siqueira, grains market analyst for AgRural, a Brazilian agricultural consultancy. For corn, costs are up around 30%.

While the threat of another La Niña and its devastating impact on crop yields is a concern, Siqueira says farmers will continue to plant and hope for the best.

Instead, their biggest concern is the Oct. 30 presidential election. “Most farmers are supporters of President Bolso-naro and are afraid his leftist opponent, former president Luiz Inácio Lula da Silva, might win,” she says. “Farmers believe Lula could take measures that would weigh on their profitability, such as export taxes and export quotas, ‘turning Brazil into Argentina’, as they say. They also fear a nervous economic environment, with foreign investors afraid of putting money in Brazil.”

Beyond politics, Brazilian farmers are worried about slow demand for soybeans from China, Siqueira says. In 2021, China was the top importer from Brazil of soybeans, cotton, sugar, beef, pork and chicken.

JUST IN: ADM sets record for single soybean shipment from northern Brazil

Thu, 22 Sep 2022 02:43:03 GMT

By Nayara Figueiredo

SAO PAULO, Feb 22 (Reuters) - U.S. grains merchant Archer-Daniels-Midland Co said on Tuesday it has carried out the largest soybean shipment in the history of the Ponta da Montanha Grain Terminal (TGPM), located in the northern Brazilian city of Barcarena, as it shipped 84,802 tonnes in a single vessel.

It also represented the largest volume ever shipped on a grain vessel from ports located in the Amazon Basin, the company told Reuters.

“This showed us that we have one more option to move soybeans through the TGPM, using our own vessel... This is definitely something we will do again more often”, ADM’s South America Logistics Director, Vitor Vinuesa, said in a statement.

ADM-owned bulk carrier MV Harvest Frost, which is 237 meters (777.56 ft) long and 40 meters wide, set sail last week for the port of Rotterdam in the Netherlands, where the company also owns a terminal. The company said all the soybeans moved will be crushed by ADM itself, obtaining products such as soymeal, cooking oil and biodiesel.

The previous record for shipments from Brazil’s northern region was set at the port of Santarem in 2020, when 82,531 tonnes of soybean were moved in a single vessel.

(Reporting by Nayara Figueiredo; Writing by Gabriel Araujo; Editing by Bernadette Baum)

Record On Tap: Brazil’s Soybean Acres Will Exceed 100 Million for the First Time

Tue, 30 Aug 2022 18:58:10 GMT

In September and October Brazilian farmers will start to plant corn, soybeans and other crops. Forecasts show, if weather cooperates, the 2022/23 Brazilian crop harvest could be the largest ever, according to CONAB, the country’s food supply and statistics agency.

For the upcoming crop season, CONAB forecasts Brazilian farmers will produce more than 300 million tons of soybeans, corn, cotton, rice, wheat and soybeans. That is 14% higher than last season, when Brazilian farmers harvested an estimated 271.4 million tons of grains — an all-time high.

The expected growth of the Brazilian crop is attributed to two factors, according to the University of Illinois’ Joana Colussi, Gary Schnitkey and Nick Paulson. They include:

2.5% jump in planted area
11% higher yields versus 2022

Although production costs are expected to be higher in the coming season, Brazilian farmers will benefit from high commodity prices, robust global demand and a favorable exchange rate.

Colussi, Schnitkey and Paulson recently analyzed the CONAB data in a farmdoc daily piece: New Record Grain Production on Horizon for Brazil

20% Increase for Soybean Crop

Soybeans account for almost half of the total grain produced in Brazil. The 2022-23 soybean crop is projected to be 5.525 million bushels (equivalent to 150 million tons), an increase of 21% over the previous harvest (see Figure 1).

Brazilian soybean acreage is expected to grow 3.5%, to 105 million acres, according to CONAB. It would be the first time the planted area will exceed 100 million acres. Most of the increase, Colussi, Schnitkey and Paulson say, is expected to be as a result of the conversion of pasture to accommodate soybean planting.

Average yields for the 2022/2023 season are expected to be 17% greater than last growing season, when severe drought affected southern states in Brazil.

“High prices and profits last season, coupled with the depreciation of the Brazilian currency relative to the dollar, have motivated farmers to increase their planted acreage,” the authors write. “The expected margins for soybeans remain positive, despite the rise in production costs, driven mainly by a spike in fertilizer prices.”

The net operating margin for soybeans in Mato Grosso, the largest soybean-producing state, should decrease from 59% last season to 23%, according to CONAB.

Brazilian soybean exports in 2022/23 are forecast at 92 million tons, a 22% increase from this season’s estimated shipments of 75 million tons.

Corn Acres Jump 2.5.%, Yields Jump 6%

Brazilian total corn acreage is expected to grow 2.5%, to 55 million acres, according to CONAB. More than 70% of the corn produced in Brazil is from the second corn crop (known as the safrinha), planted right after the soybean harvest, typically in January and February. The 2022-23 corn crop is projected to be a record of 4.941 million bushels (equivalent to 125 million tons), an increase of 9.4% over the previous harvest (see Figure 2).

High domestic and global corn prices are the primary drivers for the expanded corn planting area. The net operating margin for corn in the 2022/23 crop season in Mato Grosso, the largest corn-producing state, should decrease from 9% last season to 7%, according to CONAB. The rise in the price of fertilizers is one of the main factors for the increase in production costs.

In the 2021/22 season, Brazil produced 4.515 million bushels of corn, a 32% increase compared to the previous harvest season affected by severe drought. Average yields for the 2022/23 season are expected to increase by 6% over the previous season.

The growth in the safrinha crop is an opportunity for Brazil to double its corn production in the coming years. Brazil is the world’s third-largest corn producer and exporter, behind the U.S. and China. In addition to having new agricultural frontiers to increase corn production, mainly used as animal feed, Brazil is expanding its ethanol production. Currently, 17 corn ethanol plants are in operation, including 10 in Mato Grosso and 5 in Goiás.

Brazilian corn exports in 2022/2023 are forecast at 44.5 million tons, a 19% increase from this season’s estimated shipments of 37.5 million tons.

Read More

New Record Grain Production on Horizon for Brazil

Despite Drought Brazil On Track to Harvest Record Safrinha Corn Crop

Brazilian Agriculture: Room to Grow

GMO Wheat Searches for a Spot on the World's Table

Mon, 20 Jun 2022 15:06:47 GMT

Gro Intelligence reported in May that the U.S. government estimates global wheat stockpile levels are at 33% of annual consumption, and they believe these estimates don’t “add up.”

Sara Menker, CEO of Gro Intelligence, says her team’s estimates differ from the government’s, showing wheat stockpiles are as low as 20% of the annual consumption, meaning the world has just 10 weeks’ worth of global wheat consumption in storage.

With threats to global food supplies, ag companies are stepping up to ensure wheat has a seat at everyone’s table. Embrapa, Brazilian Agricultural Research Corporation, is taking a shot at filling the wheat void through GMO wheat trials.

GMO Wheat Reserves a Seat

Embrapa has been working with GMO wheat research since 2010, but the first experiment installed in the field by Embrapa was sowed in March 2022, says Álvaro Dossa, Embrapa’s senior wheat analyst. He says the company’s three GMO wheat cultivars concentrate on the HB4 gene—obtained from the company Bioceres—which focuses on the plant’s resistance to drought.

The current trails are small, measuring 70.8 m². Embrapa says the garden bed-like experiment will expand after this year, once it chooses the best plants in the field.

Measuring Success

While the experiment is ongoing, Embrapa isn’t prepared to make any predictions in wheat productivity yielding from the HB4 gene. However, surveys point to possibilities.

Surveys carried out in other countries point towards gains in grain yield ranging from 2% to 41%, with an average of 19.3%. Embrapa says it expects to find at least “similar gains” in Brazilian conditions.

“Resistance to water deficit should have an impact on the increase in the area of wheat cultivation in the rainfed system of wheat, since we estimate there are over 2.5 million hectares suitable for wheat growing in the Brazilian Cerrado, that we can use without any changes to the environment, just by including wheat in our established crop rotations for soybeans, beans, cotton, among others,” says Dossa.

Data from the initial experiment will be available soon, according to Dossa.

“The GMO wheat harvest is scheduled for August 2022, when the plants with the best performance and potential results will be evaluated,” he says. “A new experiment should be carried out in the next crop (2023) and so on, until confirming possible benefits or limitations in the use of transgenic wheat with the HB4 gene in Brazil.”

Wheat Market Opportunities

According to Embrapa, the first research results should be available in three years. If the results are promising, commercial-scale GMO wheat cultivation in Brazil will depend on legal matters.

The company says authorization for cultivation will come from the Brazilian Government and then meet commercial criteria, such as royalties and intellectual property belonging to the company that owns the BH4 gene, Bioceres.

What’s at Stake

The war in Ukraine is increasing the area of wheat cultivation in Brazil, but Embrapa says it isn’t the main driver in its GMO wheat research. With their first request for the HB4 gene from Bioceres in 2017, before the conflict and the pandemic, Embrapa says it’s had a spotlight on wheat for some time.

Embrapa does feel a rush to quickly meet the increase in food demand, however.

“Current food demand can accelerate the acceptance of GMO wheat by the end-consumer. Mainly, the European market,” says Dossa. “Despite importing 40% of the wheat it consumes, Brazil already exports 15% of its national wheat production to Africa and Asia.”

He says in 10 years, if wheat production continues to grow at a rate of 10% per year like in the last couple of years, Brazil will increase its overall projected production of 8 million tons in 2022 to around 20 million tons by 2031, “positioning Brazil among the top ten wheat exporters in the international trade.”

Race to the Finish

When asked, Embrapa says it is aware of research on GMO wheat at other companies like Monsanto (Bayer), CSIRO (Australia), the Maize and Wheat Improvement Center (CIMMYT), Rothamsted Research (UK), among other institutions around the world.

However, the company sees this as healthy competition.

“We consider all initiatives to be beneficial in seeking solutions to the various issues affecting wheat,” says Dossa. “Embrapa is available to build partnerships and jointly develop technologies that favour farmers, industry and consumers. Science is key in solving the world’s problems.”

More on wheat:

Is the World Really Running Out of Wheat?

New Plantings in CRP Not Feasible, According to USDA

20 MMT of Grain Trapped in Ukraine, Port Solution Needed in 60 Days

Thu, 12 May 2022 19:30:17 GMT

Earlier this week President Joe Biden said Ukraine has 20 million metric tons (MMT) of wheat and corn in storage, with no way to ship it out of the country.

Russian forces keep hammering key shipping areas in Ukraine, such as the city of Odessa on the Black Sea.

Farmers in Ukraine are planting corn and wheat, which will be harvested this summer, but with silos already full of last year’s harvest and ports closed, there is nowhere for it to go.

“Right now, Ukraine’s grain silos are full,” says David Beasley, executive director of the World Food Programme . “At the same time, 44 million people around the world are marching toward starvation. We have to open up these ports so that food can move in and out of Ukraine.”

Before the war, most of the food produced by Ukraine – enough to feed 400 million people – was exported through the country’s seven Black Sea ports. In the eight months before the conflict began, close to 51 MMT of grain transited through the ports.

“I don’t see how the country does anything but collapses if the ports aren’t opened,” he says. “Farmers harvest in July and August. You really only have a matter of days — around 60 — to resolve this issue.”

Read More: WFP calls for urgent opening of Ukrainian ports to help rein in global hunger crisis

All Eyes on 2022 Crops

Farmers in Ukraine will likely not get 25% to maybe as much as 40% of their corn crop planted this year, says Jon Scheve, president of grain for Superior Feed Ingredients. This, combined with how much is trapped in storage, creates extreme logistical hurdles.

The city of Odesa and nearby ports are important Ukrainian grain export hubs, he says, even more significant than how New Orleans is for U.S. grain exports.

“This means whichever country controls Odesa will control Ukrainian grain exports,” he says. “And if facilities are damaged or destroyed, it could take years before the region is a reliable global source of corn and wheat again. In the end, it may not matter if Ukrainian farmers get their crops planted if they do not have anywhere to move it.”

Read More: Are The Highs In? War And Weather Make Predicting Difficult.

Read More

Ukraine Has Planted 20% of Expected Spring Crops So Far This Year, Says Ukrainian Ag Ministry

War in Ukraine: Risks and Opportunities for U.S. Farmers

Why Did Russia Invade Ukraine? Implications for Agriculture

Straight from Ukraine: Farmers Share Planting Updates, Concerns and More

Ukraine-Russia Tensions: What it Could Mean for Agriculture

Brazil’s Drought: The Trigger that Could Take Corn Prices Higher?

Thu, 28 Apr 2022 18:44:44 GMT

This year, USDA is calling for record corn production from Brazil. For 2021/22, the country’s corn crop is predicted to hit 116 million metric tons (mmt), which is larger than last year’s crop by 33%. Corn yields are estimated at 5.50 tons per hectare, 26% above last year’s mediocre crop and 5% above the five-year average.

Brazil grows three rounds of cor n each year. The Safrinha crop, which accounts for 76% of total corn production in Brazil, is in its vegetative state and will be harvested between May and August.

That growing crop is facing severe drought conditions, according to the latest Root Zone Soil Moisture Drought Indicator map from NASA’s GRACE mission.

“Drought has emerged across parts of the Safrinha corn crop in Brazil,” reports Eric Snodgrass, principal atmospheric scientist for Nutrien Ag. “The end of the South American monsoon has come earlier than average this year due to a surging La Niña. The drier finish on the Safrinha crops will limit their yield potential – especially for late-planted corn.”

Mato Grosso, Brazil’s top Safrinha corn producer, is facing its driest April in 17 years, according to weather service EarthDaily Agro. Accumulated April rainfall for the state is expected to be 70% below the 10-year average. Neighboring Goias is expected to have an 85% reduction in April rainfall.

“This is a big deal, and it is not being talked about nearly enough,” says Joe Vaclavik , president of Standard Grain. “Most of the focus right now for the corn market is on the U.S. weather situation and planting delays, but this is a big deal. Common logic says it’s too early to get worried about U.S. planting delays, but maybe in a tight situation like this maybe that’s a warranted argument.”

Vaclavik expects Brazilian corn crop estimates to start declining soon, maybe even ahead of the May 12 World Agricultural Supply and Demand Estimates.

What does Brazil’s drought mean for corn prices?

Kevin McNew, chief economist at Farmers Business Network, says the long-lasting and widespread dryness in Brazil is reason for concern.

“You’ve got about 30% to 40% of the crop that’s got some level of stress on it,” he says. “There’s not any sort of significant rainfall in the forecast in the next 10 days. If we don’t start to see some rain that could be our catalyst for another leg up.”

Brazil is the third-largest corn producer in the world (following No. 1 U.S. and No. 2 China). McNew says the Brazilian corn crop is the main global supplier between now and the U.S. harvest this fall.

“So, it is all the world’s got to draw from,” he says. “That may be the catalyst that gets us to what I know a lot of farmers think starts with one and has two digits before the decimal.”

Listen to McNew discuss the current markets with Chip Flory on AgriTalk:

Read More

Grain Prices ‘Well-Supported’ for Next Three Years, says RaboResearch Economist

Jerry Gulke: When do Market Signals Show “High Prices” Are High Enough?

3 Trends That Will Ignite A Commodity Super Cycle

Thu, 10 Mar 2022 21:04:50 GMT

Volatility is here to stay in the grain markets — but so could higher prices.

“Today, farmers could lock in $5 corn for the next four years,” says Dan Basse, president and CEO of AgResource Company.

For perspective, December corn prices topped $5 last year, but hadn’t been above that level since 2014.

Listen in as Basse shares his insights with Paul Neiffer on the Farm CPA Podcast :

How long can these prices last? Basse says it could be three or four years. What is causing this bullish market? Basse points to three big factors:

1. Ukraine-Russia Conflict

Russia’s invasion of Ukraine is bringing massive uncertainty to the global markets. Ukraine is a key player in global agriculture, and how these conflicts play out will have international impacts. Ukraine has more than 41.5 million hectares (or 102.5 million acres) of agricultural land that cover 70% of the country.

Globally, Ukraine ranks:

1st in global sunflower production (For 2021/22 Ukraine sunflower seed production is estimated at a record 17.5 MMT)
6th in global corn production. (For 2021/22 Ukraine corn production is estimated at a record 42 MMT)
6th in global barley production
7th in global rapeseed production
9th in global soybean production
9th in global wheat production

What if spring crops aren’t planted this year?

“If we assume that Ukraine is likely to be out for a year, we almost have to think about corn being above $8,” Basse says. “Soybeans would hang between $15 and $18.”

Based on conversations with Ukrainian contacts, Basse says most of the country’s farmers have most of their seed, fertilizer and other key inputs. Their biggest challenge is labor.

“Finding employees to sit on tractors for 10,000-hectare farms is going to be the real key as we get into April and May,” he says.

2. “Green” Fuels

The dramatic development of the U.S. renewable diesel and Sustainable Aviation Fuel (SAF) industries could be a massive demand driver going forward for soybeans, Basse says. Soybean oil will be used for renewable diesel, while SAF uses ethanol.

“This is going to be very important as more and more of the U. S. auto supply becomes electrified,” Basse says. “By 2030, we think 28% to 40% of the U.S. auto fleet will be electrified and that means you’re going to have less gas consumption. You’re going to have less ethanol blending.”

As a result, he says, ethanol needs another demand source. That’s where SAF comes in.

“Nobody wants to get on a plane that’s powered by batteries,” Basse says. “I was worried about ethanol in terms of being a mature industry. But I think this aviation fuel, if we were to fill just 20% of that, it would take care of all of the ethanol demand that would be lost through electrification.”

In terms of soybeans, Basse says renewable diesel will help big up acres. As crush facilities come online, demand could push soybean acres to 95 million and add an extra $1.50 to $2 to every bushel.

“We are calling for 90.5 million soybean acres in 2022 versus this year’s 87 million, and that just gets us started in meeting renewable diesel demand,” says Dan Basse, president of AgResource Company. “Then we’d need to increase soybean acres by 5 million to 7 million each year. We have to top 120 million acres of soybeans to meet the growing demand for renewable diesel.”

Announcements for new crush plants are rolling out every week. If the locations on the map below, which are being constructed or are in progress, all make it to production, they’ll add about 400 million bushels of domestic soybean demand by the start of 2025.

“It’s going take three years to fully build out this industry,” Basse says. “How we buy all of the acres – corn, soybeans to run these green fuels – is a good question for the years ahead. But I think it keeps the American farmer smiling at least for now.”

3. Peak Farmland

U.S. farmland acreage is at the lowest since 1909, says Basse. He refers to this issue as “peak farmland,” as in there are no more acres in the U.S. to bring into production.

“The U. S. has kind of maxed out, unless we dip into CRP, which isn’t likely,” he says. “So, the acreage we’ll need to meet world demands will have to come from either the Black Sea or from Latin America. That’s where the importance comes of losing the Black Sea to the market here today.”

In terms of Latin America, Basse says his latest calculations for Brazil show there’s about 28 million hectares that can still be brought into production (this does not include any land that’s part of the Amazon Rainforest). Read more:
Brazilian Agriculture: Room to Grow

In the Black Sea region, around 22 million acres could be converted to farmland.

“So, there is some additionally in acres,” he says. “We don’t reach peak world farmland until about 2060 or 2065. That’s when the fun really begins, because then it is all about yield. The world will have to figure out different ways of enhancing yield because it just will run out of variable land that is feasible to farm.”

Read More

Jerry Gulke: A Paradigm Shift in Soybeans

3 Global Factors Driving A New Commodity Super Cycle

South American Drought Impacts 50% of World’s Soybean Supply

Brazil's Soybean Crop Takes Another Major Hit, AgResource Company Projects Crop to Fall Under 120 MMT

Mon, 07 Mar 2022 15:21:54 GMT

Brazil’s crop may be getting even smaller. AgResource Company released their latest soybean crop production estimate for Brazil, and it shows a crop size of 119.5 MMT. The last time Brazil’s crop was under 120 MMT was during the 2018//2019 season when Brazil’s crop came in at 119.7.

“We think the crop is now under 120. Rio Grande De Sol yields have been off anywhere between 45% and 50%,” says Dan Basse of AgResource Company “If you look at the CONAB number that came out last month at 125.5 MMT, you see they kept the Rio Grande Do Sol yield near trend. If you make that adjustment, you can get down to 121. But we also saw some crop degradation in Mato Grosso Do Sul, the southern part of that state, and in Mato Grosso because of all the rain. So putting it all together a 119.5 bean crop is a big loss.”

Basse says when you factor in potential losses in Argentina and Paraguay, the loss is even steeper.

“All combined, we’re looking at 40 million metric tons of soybeans that were lost. That’s 1.4 billion bushels; we’ve never seen anything like it,” adds Basse.

USDA’s latest forecast shows drought in South America is impacting 50% of the world’s soybean supply as the estimates show the area could produce the smallest crop since 2018/19 ; however, the projections weren’t as low as AgResource Company just released. According to AgWeb, since December 2021, USDA has lowered soybean production in the three countries by more than 18 million tons:

Brazil: down 7% from 2021
Argentina: down 9% from 2021
Paraguay: down 37% from 2021

Basse says the big downward adjustment came to the southern portion of the country where the soybean crop was later in maturity and weather has been poor.

“My team down there, which includes an agronomist who’s a Ph.D., we just run crop analysis, and we try to be sophisticated in working with our producers and then making field visits,” Basse explains. “And as we did this back in February, we came up with a 125 MMT, which got some eyebrows raised. But then, of course, CONAB dropped their number to 125.5 as the government had to get realistic in terms of farm payments to the Brazilian farmer.”

Meanwhile, AgResource thinks we’ll see 89 million acres for soybeans and 91 million acres for corn here in the U.S.

The University of Illinois’ Joana Colussi dives into how the drought in South American will impact the global soybean crop: