There is a difference in opinion forming over the current U.S. demand seen on soybeans. At the present time, U.S. soybean sales stand at 69 percent of the year forecasted total. Normally the U.S. has booked 66 percent of its expected soybean sales at this time, and the increase is giving the indication total sales will be larger than the USDA is forecasting.

While this is possible, it is too early to start raising the yearly target higher, especially with the South American harvest just getting underway. It will be a few weeks before we see new crop soybeans out of South America, but most importers, including China, have needs covered until then.

There is another way of looking at this elevated sales pace and one that is more likely than higher demand on a whole. It appears that U.S. soybean sales are front-loaded which means buyers are booking coverage now rather than later in the marketing year. This is typically done in years where commodity supplies are low, which is not the case on the global side of balance sheets. The U.S. soybean supply is tighter this year though, and for importers such as China who put U.S. soybeans in storage, this is a concern. This buying will stop once China has adequate soybean reserves built.

Even with elevated soybean exports, U.S. shipments are well below those of Brazil. Brazilian soybean exports for 2023 were a record 100.02 million metric tons. This is also the first time Brazilian exports have topped 100 mmt, which equates to roughly 3.67 billion bu. By comparison, the U.S. is forecast to export 1.755 billion bu of soybeans for the 2023/24 marketing year. Given the projected increase in Brazil’s soybean production this year they will remain a perpetual exporter, further reducing the U.S.’s share of the global market.

Not only is Brazil expected to produce a soybean crop at least as large as last year, Argentine soybean production will increase considerable this year as the country recovers from drought conditions. The USDA is currently predicting an Argentine soybean crop of 48 mmt, nearly twice as many soybeans as the country produced last year. This will only add to the world soybean supply, and further pressure U.S. export potential.

While the current global outlook for soybeans is rather bleak for the U.S., the domestic outlook is more positive. Soybean crush remains high as meal demand is elevated to make up for the loss of Argentine supplies. Soy oil demand is steady, but inventories of the commodity have fallen to historically low levels. The stocks to use ratio on domestic soybeans remain in a rationing range as well, which is helping keep a floor under cash values.

We are starting to see some long-range outlooks on U.S. corn balance sheets as well. The United States produced a 15.23 billion bu corn crop last year under what would be described as “good” growing conditions. This production added 770 million bu of corn to the U.S. balance sheets, and that is with elevated demand outlooks. There are very few indications that the current level of demand will increase as we move forward.

The question now is what will happen if the United States produces another good corn crop, or possibly one that is even larger. It is not out of the question this could push the U.S. corn carryout above 3 billion bu. While this has been predicted in previous. times in history, one major difference between then and now is the increase we have seen in global corn production in recent history, mainly in South America. This has already diminished demand for U.S. corn and will continue to do so.

One of the greatest factors in U.S. corn balance sheets will be how much pressure we see from Brazil in global trade. Brazil topped the United States as the world’s leading soybean exporter a few years ago, and this year it will top the U.S. on corn trade.

For comparison, in 2003 Brazil grew a 50 million metric ton corn crop and exported a mere 8.5 million mt. This year Brazil is forecast to produce a 129 million mt corn crop and export 55 million mt. Before long Brazil will become a perpetual corn exporter, same as they already are on soybeans.

Not everything in the market at the present time is doom and gloom, however. One factor that we need to keep a close eye on is the drought that is still impacting much of the U.S. corn and soybean growing regions. While much lower than at its peak, nearly half of the U.S. main production regions remain in abnormally dry soil conditions. While drought is much less of a concern in the winter months, this can easily develop into a market story by next fall. 

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