The analytical firm SP Global has released its projection for this coming U.S. production season’s acreage. SP Global is predicting U.S. farmers will plant 93 million acres of corn this year, down from last year’s 94.6 million. This reduction was not a surprise, and in fact a larger cut is needed to prevent the U.S. from seeing its corn reserves build to a burdensome level.

Soybean plantings are forecast at 85.5 million, up from last year’s 83.6 million. Trade was hoping to see more acres of soybeans to further rebuild the U.S. reserves. This shortfall is giving new crop soybeans price support, but not a substantial amount given ongoing deterioration to corn futures.

Wheat acres were projected at 47.23 million by the firm, down from last year’s 49.6 million. Of these, 34.44 million acres are forecast to be winter wheat.

The official USDA acreage numbers will be released on March 28 in the prospective plantings report. The Ag Outlook Forum in February will also give us the USDA’s initial look at 2024/25 balance sheets, but most interest will be on the May WASDE report as that has more definitive data.

Soybean harvest is advancing in Brazil and so far, yields remain low. This is not surprising given the region where harvest has started is one of the most affected by the season’s drought. Even if yields are low, it is still adding soybeans to the country’s supply and bringing the start of their new crop exports closer. This comes even as the country continues to export old crop.

Analysts in Brazil remain mixed in their opinion of crops with production estimates ranging from 153 million metric tons to 163 mmt on soybeans and from 119 mmt to 129 mmt on corn. Differing opinions on actual plantings are a factor for these wide ranges, especially on corn.

Conditions are much better in Argentina, where analysts have started to raise their expectations. The Rosario exchange has Argentina’s corn crop rated 95 percent good/excellent, and the soybean crop 75 percent G/E. This data is limiting market reaction to losses in Brazil as total South American production is still likely to be higher than last year.

South American weather reports remain mixed with several regions of Brazil and Argentina seeing rains in recent days. The question is if these were heavy enough to benefit the crops and production potential. This sporadic rainfall is nearly identical to what took place in the United States last year and yields were much better than expected in many areas. As a result, we are not seeing the risk buying in the market that has been expected.

Several of the world’s leading importers claiming they will trim soybean usage is also countering weather concerns in Brazil at this time. The leading one of these is China who is cutting meal in feed rations by 1.5 percent which equates to 9 million metric tons of soybeans. This is being verified by port meal supplies in China rising for eight consecutive weeks. 

China has released its 2023 import data, and most interest has fallen on its soybean demand. China imported 99.4 million metric tons of soybeans in 2023. Of this, 69.95 mmt originated from Brazil, a year-to-year increase of 23 percent. U.S. soybean sales to China totaled 24.1 mmt in 2023, a decline of 13 percent from 2022. The United States used to dominate Chinese soybean demand in recent years, but the current share of trade is just 24 percent, while Brazil has increased its market share to 70 percent.

Chinese officials claim the country’s sow herd at the end of November totaled 41.58 million head, a 1.2 percent reduction from October. November hog slaughter was up 8.9 percent from last year and 4.2 percent higher than in October as consolidation continues to take place in the industry. This follows the worst yearly returns for the Chinese hog industry since 2014. China’s government also showed that 68 percent of the country’s hogs are now raised in modernized facilities, up 3 percent from last year. 

The U.S. cash market is showing more strength at interior locations as country movement remains very low. This was expected following our recent cold snap and heavy snowfall. Processors have been hoping to see more selling to start the year, but farmers are not interested in marketing inventory at today’s values. This is giving basis support in several regions. Buyers know there is a large amount of unpriced inventory in the country market though, and before long farmers will need to generate income for spring expenses. This is keeping any push in the cash market limited, both in amount and time.

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