Several crop tours have taken place in recent weeks. One interesting report from these tours came out of central Illinois, where lower ear populations were noted. Even so, tour participants estimated the average corn yield for this area at 247.1 bushels per acre according to QT News. While this may be a small area overall, it does start to bring into question some of the higher corn production estimates we are seeing.

While much of the talk in the market has been on the potential for this year’s crops to be record sized, not enough has been given the projected demand. The difference between this year’s corn production and projected demand is just 182 million bu. On soybeans, the difference is 200 mbu. While these are in fact builds, especially on soybeans, a loss of just two bushels per acre will erase much of this spread. For soybeans, a three bushel drop in yield puts us back in a rationing position. Any reduction to harvested acres will have the same result on balance sheets.

Now that trade is becoming more comfortable with U.S. crop production, market attention is starting to shift more toward demand. While demand is always a factor in price discovery, this seasonal shift in focus moves it closer to the front of fundamental influences.

While we continue to hear talk that demand for U.S. commodities “needs to build,” our current sales paces are quite good. Old crop sales of corn and soybeans are just ahead of current USDA projections. New crop demand is also very good for corn and starting to build on soybeans. Wheat demand is also solid to start the marketing year. The issue at the present time is more from over-production than a lack of usage and this has capped market recoveries.

One interesting factor is being seen in current U.S. exports. As hoped for, non-traditional buyers have surfaced in the market and compensated for much of the export trade the United States has lost with China. U.S. corn sales for this marketing year to China currently total 2.8 million metric tons compared to 4.8 mmt a year ago. Sales to Mexico are up 7.2 mmt from last year though, pushing yearly sales 12.36 mmt ahead of last year, and keeping sales above USDA expectations.

The same scenario is playing out in the soy complex. Chinese demand is down 6.7 mmt from last year, but sales to other importers have erased this deficit. As with corn, cumulative soybean sales are just ahead of the projected pace. We are now starting to see more new crop demand for soybeans as well.

The Climate Prediction Center has updated its La Nina weather even forecast. The CPC now states there is a 66 percent chance of a La Nina forming between September and November. Previously the group had the odds of a La Nina at 70 percent from August to October. The CPC is forecasting a 75 percent chance of a La Nina being in place from November through the end of the year. While this means the La Nina will have limited impact on U.S. crops, it may very well be a factor for South American production, especially in Argentina.

We are starting to see questions surrounding China’s recent soybean import totals. Chinese officials claim that the country imported 9.85 million metric tons of soybeans in July. While this was a 2.9 percent increase from July 2023, it was well short of what trade was expecting. Estimates had China’s July soybean imports between 13 and 14 mmt. There are now thoughts China did not fully account for soybeans that were imported for storage, only the soybeans that were bought for immediate processing. The question now is if this is taking place, has it thrown off China’s total soybean consumption for the year. 

The Brazilian analytical firm Safras has updated its soybean sales data. Safras believes that Brazilian farmers have now sold 77.5 percent of this year’s soybean production, 2 percent more than what was sold last year at this time. Soybean sales for the 2024/25 marketing year stand at 18.3 percent of intended production compared to the 13.9 percent that was forward contracted a year ago. The strength in the U.S. dollar is pushing Brazil’s soybean sales higher this year, along with the need to still cover last year’s losses in Argentina production.

The average weight of U.S. beef carcasses continues to rise. The latest data shows beef carcasses are averaging 901 pounds. This is 37 pounds heavier than last year. One reason for this is cheaper feed grains that are keeping animals on feed longer than a year ago. A shift to more steers being slaughtered per week is also raising the average weight as the culling of cows and heifers has subsided. Steers tend to dress heavier than cows. This additional beef has greatly offset the lower cattle on feed numbers we are currently seeing and keeping wholesale beef values under pressure. 

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is collected from a variety of sources and is believed to be reliable but is not guaranteed to be accurate. This report is provided for informational purposes only and is not furnished for the purpose of, nor is it intended to be relied upon for specific trading in commodities herein named.