Once again analysts are taking this year’s crop ratings and comparing them to recent years with similar numbers. It is not surprising that in these years both corn and soybean yields were high, as current crop ratings remain above average. Current weather is also very favorable for production in many areas of the U.S., but at the same time, many acres have been lost this year from floods and hail damage in the Western Corn Belt. It is not out of the question that we could see trend yields this year but smaller overall crops than what are currently predicted from an increase in unharvested acres.

Reports have surfaced in the market that China has overbooked its soybean needs, possibly by a substantial amount. This is the result of very active buying last spring when soybean futures were depressed by the start of the Brazilian harvest. This came at the same time feed demand in China started to decline as hog herd culling reduced all feed-grain consumption. The glut of soybeans China currently has is the primary reason we have seen very little new crop trade with the United States. Sources in China now claim that with crush margins deteriorating it is unlikely we will see a big rebound in demand ahead of the next South American harvest next spring.

It was also announced that the European Union would be placing tariffs on Chinese biodiesel imports, further heightening trade relation tensions between those two parties. EU officials are stating that China is exporting biodiesel below fair market value which is against world trade rules. As a result, the EU will be assessing an import tax from 12.8 percent to 36.4 percent on biodiesel imports from China. The question in the market now is how China may retaliate with its own tariffs on the EU.

China’s latest red meat import numbers verified the shift we have seen in demand. China’s June beef imports totaled 210,000 metric tons. This is a decline of 4.5 percent from May and 10.8 percent less than China imported in June 2023. Year to date beef imports total 1.44 mmt, which is an increase of 17 percent from last year. China’s June pork imports totaled a mere 90,000 mt, a volume that is equal to May’s imports, but a 33.5 percent decline from June 2023. China’s cumulative pork imports for 2024 total 510,000 mt, a drop of 45.3 percent from 2023.

Even though the fall harvest is rapidly approaching, there is still a considerable amount of growing season in front of us. In fact, the next few weeks can be some of the most critical of crop development. In numerous years we have seen very good crop ratings until later in the growing season when weather impacted ear and pod fill. Long range forecasts are starting to turn a little warmer which is causing nervousness in weak short positions.

Weather losses in the Black Sea are also starting to have more of an impact on global commodity supply outlooks. Ukraine officials announced today that weather has cut the country’s corn crop by 6 mmt from the previous estimate. They also state that losses could reach 18 mmt without an improvement to weather conditions. Ukrainian corn has been sought by importers due to its low price, especially into the Asian market.

While weather has trimmed Ukraine production, so has a simple loss of acreage. Russia now controls some of the area that was prime ag land for Ukraine. The unknown is how many of these acres Ukraine is counting as theirs, and if Russia is doing the same, altering world production estimates.

Not only is the Ukraine corn crop going to be smaller this year, but likely lower in quality as well. There are also concerns about the remaining grain that is being stored in Ukraine facilities that have been hit with Russian missiles. To potentially see elevated demand for U.S. corn because of this is not out of the question, especially with U.S. corn competitive in the global market.

The Brazilian analytical firm CONAB has released its updated balance sheets on the country’s beef industry. CONAB believes Brazilian beef production will total a record 10.19 million tons in 2024, a 7.1 percent increase from 2023. This would be the largest beef production total since 2006. Brazil’s 2024 beef exports are forecast at 3.44 million tons, a 13.4 percent increase from 2023. While this is slightly negative for U.S. beef exports, the higher production and feed demand is also keeping more Brazilian corn off the export market.

What is more concerning for U.S. beef exports are the losses seen in the Chinese marketplace. China’s beef market continues to collapse with values trading lower for 23 consecutive weeks. Beef in China is now trading at its lowest level in the past four years. Retail beef demand in China is dropping even with lower values, with some restaurants cutting costs by 25 percent. China has been a leading importer of U.S. beef, and the loss of their business will greatly impact U.S. balance sheets.

There are also concerns over retail beef demand in the United States following recent negative labor reports that show a tightening in the U.S. workforce.

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