Weather remains a driving factor in daily price discovery. This is not just for production, but for transit issues as well. Growing interest is falling on river levels in the U.S. and how many parts of the lower Mississippi River are reporting lower water levels than a year ago. This has already caused disruptions to navigation ahead of the harvest season. Trade is now focused on Tropical Cyclone Six that is expected to move into the Gulf this week, and through the lower Mississippi River Basin. From there the system is expected to move into the Ohio Valley by next weekend.

Low water is also a major factor in South America right now and is impacting movement there as well. Brazil is seeing its river levels drop to a point where drafts have been restricted on most waterways. Argentina is also reporting its lowest Parana River levels in the past year which is the country’s main artery for exports. Even Paraguay is stating their river levels are record low. Even with competitive values, these logistic issues have diminished demand for South American offers in the global market.

These low water levels have also caused a delay to the start of the planting season in Brazil as farmers claim they will wait for rains and cooler temperatures before planting begins. If these delays are long enough, they will start to cause questions over potential crop size of both soybeans and the country’s second corn crop.

How much storage will be available this fall for new crop bushels is starting to be heavily debated. It is no surprise that the U.S. farmer continues to hold a larger than normal volume of old crop inventory, both corn and soybeans. Commercial buyers had expected a large flush of these old crop bushels prior to harvest, and while sales have picked up in the past week, they are still historically low. It now appears as though this elevated selling may not take place, and farmers will hold these bushels into the new crop marketing year. The question now is if farmers will store that crop as well, further tightening the cash market pipeline supply.

For the past several months, the U.S. ethanol industry has been supported by strong export demand. While this is not expected to drop anytime soon, trade is starting to question how much more export demand we will see. According to data from Stone X, the United States currently exports 8-12 percent of its ethanol production. For the past three years, exports have been holding at the top side of this range. This build has been enough to cover slowing domestic ethanol consumption as gasoline use on a whole declines. Ethanol consumption in the U.S. is actually becoming negative at current blend levels.

Over the past few weeks, we have seen a jump in new crop export sales, mainly for soybeans. This has started to cause a shift in market attitude that the U.S. soybean program may be backloaded this year rather than front-loaded. Historically, we have seen soybean importers buy larger volumes ahead of the U.S. harvest, then demand slips as the year progresses. Given the expansion to Brazilian soybean production in recent years, importers have not needed to show as much urgency in covering needs. Importers are now taking the bulk of their soybeans from Brazil at their harvest and using the U.S. to fill needs past this. The primary one of these is China, who has now started to extend their new crop U.S. purchases.

The shift in where China sources its soybeans from continues to widen. Of China’s soybean imports for this marketing year, 43.56 million metric tons were sourced from Brazil. This is an increase of 12 percent from the same period in 2023. The U.S. has supplied China with 12.63 mmt this year, a 25 percent reduction from last year. This said, in the month of July the U.S. shipped China 475,000 mt of soybeans, three-times the volume it did a year ago. Now that China is actively booking U.S. soybeans, the U.S. market share will increase, likely for the remainder of the year.

The question now is how many soybeans China may need to import, and this also favors the .US. Data indicates China currently has 7.4 mmt of soybean commitments on the books, and of this, 4 mmt is for September delivery. This leaves the lowest volume of fall soybean coverage for China in recent history. China has already started to book more new crop soybeans from the U.S. and this lack of coverage gives the U.S. a wide window for sales ahead of the next South American crop.

While the United States has seen competition from Brazil in the global soybean market, very little pressure has been noted in corn trade. Marketing year corn exports for Brazil currently total 18 mmt, 10.6 mmt less than a year ago. Brazil is also claiming to have no corn sales on the books to China. While China has not been an active buyer of U.S. corn either, the U.S. is seeing enough other demand to push cumulative sales well above last year.

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