It is no surprise that low commodity values have pressured U.S. farmer balance sheets. This is not necessarily from low demand, but more from elevated production and inventory on a global level. Wheat futures are seeing the most negativity from this situation as large Russian and Ukraine wheat supplies are allowing those sources to export elevated volume of grain at lower costs. This is pressuring both U.S. wheat values and demand. One great benefit for the U.S. wheat market, as well as corn and soybeans, is that U.S. commodities are higher in quality than those from other sources and are needed to blend with lower quality imports.

One thought that is starting to give the market support is that importers are making smaller purchases, and this is why we are not seeing daily sales announced, as the totals are below reportable levels. Importers are only interested in covering immediate needs at today’s market values, and this is keeping daily purchases volumes low, but overall bookings remain strong. As a result, the United States may see its export demand spread out over a greater period of time, which is different from what market analysts are used to seeing.

The debate over Brazil’s safrinha production is starting to heat up. Conflicting acreage data is the primary cause of this market uncertainty. The Brazilian firm CONAB, that country’s version of the USDA, claims safrinha plantings are down 8.3 percent from last year as previous market economics and returns were not favorable for corn production. Other groups point out how both of these factors have improved, and acreage may not be much different than a year ago. Elevated seed demand in Brazil is also giving credit to higher crop estimates.

The fact that soybean and first corn crop yields were better than expected for Brazil have analysts thinking safrinha production may yield better as well. This has created a wide variance in total Brazilian corn production estimates, with trade guesses ranging from 112 million metric tons to 126 mmt.

The Brazilian crush firm Abiove has released adjusted production data that weighed on the soy complex. Abiove believes the 2023 Brazilian soybean crop was larger than what current balance sheets indicate. Their data shows the crop was 160.3 mmt, 1.2 mmt larger than previously thought. This raised 2023 ending stocks to 4.9 mmt and takes the 2024 carryout estimate from 4 mmt to 5.2 mmt. While this is not a tremendous number of soybeans, it further reduces the urgency to book needs in today’s market.

A major change has started to take place in South America and is having a significant impact on marketing and commodity flow. Over the past few years, South American farmers have started to store more bushels rather than marketing the bulk of production right at harvest. Not only have farmers in South America built modern storage facilities, but they are also heavy users of storage bags, similar to those used in the United States. This allows South American farmers to spread out sales, keeping basis values firmer than in recent history. This change in storage is also making it harder to accurately predict how much grain and soybean inventory those producers are holding.

Australian officials have released a statement that the El Nino weather pattern has come to an end. Unlike other forecasters, the Australian weather bureau is not positive a La Nina will develop later this year. This is in contract to the United States’ climate prediction center, which has La Nina odds at 60 percent by mid-summer. La Nina events tend to give Australia highly favorable growing conditions and led to three consecutive bumper wheat crops before this season. The real unknown is how strong the La Nina may be, as weak events tend to have limited impact on global production.

Chinese officials announced that the country’s first quarter of 2024 pork production was down 0.4 percent from the same period in 2023. This put total pork production at 15.83 mmt and was the first decline for the quarter in the past four years. Slowing herd liquidation is behind the lower pork production number. Chinese beef production was up 3.6 percent in the first quarter of 2024 though, and poultry production expanded by 6.1 percent.

In other Chinese livestock news, the country announced it was lifting its restrictions on German beef imports. China had held beef imports to animals that were over 30 months old. This restriction was placed when Germany reported its latest outbreak of mad cow disease. There are concerns that this will further stress the U.S. beef export market.

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