U.S. weather outlooks are becoming more of a focal point of the market and right now outlooks favor what could be an early planting season. Much of the U.S. has less snow cover than a year ago and soil temperatures are already starting to warm in some areas. These are factors that support corn plantings, especially with lower input costs. Even with depressed futures it may be hard to sway acres away from corn with these conditions.

Another topic that is gaining market attention as we approach the spring planting season is the falling price of urea fertilizer. Spring urea offers in the New Orleans market are currently ranging from $350 to $355 per ton, a decline of $9.50 from last week. Summer urea offers are averaging $317 per ton, well below the five-year average of $550 a ton. Today’s offers are considerably less than the 2022 market, where values topped $1,000 per ton. A sharp reduction in natural gas values is the primary cause of the drop in urea values. It is not out of the question that these lower fertilizer costs could encourage corn plantings, even with depressed futures.

China has released its meat production totals for 2023. The most interest in this data was on pork following massive liquidation in the country to prevent the spread of African swine fever. China’s 4th quarter hog slaughter totaled 726.6 million head, an increase of 3.8 percent from the same period in 2022. Hog sales for the calendar year were up 5.4 percent from last year. This puts 2023 pork production in China at 57.9 million metric tons, an increase of 4.6 percent from 2022. Beef production for 2023 in China was reported at 7.5 mmt, up 4.6 percent from 2022. Beef slaughter was up 3.8 percent in 2023 at 50.23 million head. China also reported increases in poultry production of 4.9 percent and a 1.3 percent growth in mutton output.

Chinese officials have also updated their sow inventory totals. As of the end of January, China reported a sow herd of 40.67 million head. This is down 1.8 percent from the end of December and a huge 6.9 percent reduction from January 2023. Ongoing liquidation to avoid African swine fever led to the decrease in sow numbers. January hog slaughter totaled 37.25 million head in China, an increase of 28.6 percent from January 2023.

Even with contraction in hog numbers, China is seeing its feed production capacity increase. According to research from Sitonia Consulting, total feed production capacity in China at the end of 2023 was 321.6 million tons, a 6 percent increase from 2022. China currently has 1,050 feed mills with a capacity of 100,000 tons or more, an increase of 103 from 2022. These account for 61 percent of the country’s feed production.

What is being noted with this expansion is a change in major feed ingredients in China. Corn demand for all of 2023 in China was up 7 percent from the previous year, mainly from higher hog numbers than the year before, but also from weaker corn values. Feed wheat usage was also up in the country. Chinese soy meal usage dropped 11.8 percent in 2023 from the higher wheat feeding as that grain requires less supplementing. Chinese consumption for the year was up 7.8 percent to further lower soy meal demand.

One of the greatest concerns in China right now is the high rate of deflation the country is suffering from. Consumer prices in China were down 0.8 percent in 2023, the greatest decline the country has seen in 15 years. Consumer demand is dropping at a faster rate though as wages are still low and credit in the country tightens. A much slower economic recovery from COVID closures than expected is also limiting Chinese consumer spending. This is concerning for global commodity exporters, including the United States.

Soybean harvest is rapidly advancing in Brazil, but so far, we have not heard of any transportation disruptions. Normally we see port times expand when harvest progresses, but just the opposite is taking place this year. The current wait time for a vessel to load at the Brazilian port of Paranagua is six days. This is down from 11 days just a week ago. A year ago, the wait time was 29 days.

Given these short wait periods and the current price spread between the U.S. and Brazil, it is highly unlikely we see any sales shift to the United States such as we have seen in prior years. In fact, we may see some U.S. sales canceled if importers were double booked in fear of slow Brazil loadings.

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