One thing that is quickly becoming apparent with this year’s U.S. corn and soybean crops is high variability which is not that surprising given growing season weather patterns. Field reports are indicating variability in corn yields as high as 100 bushels per acre within a very narrow distance of each other. This spread is only expected to widen as harvest advances into more areas. So far, all soybean yields remain high but are expected to see the same spread as corn as harvest progresses.

There are other factors developing in soybeans that may be worth noting. For one, more reports are coming in of smaller than normal soybean sizes in areas that experienced late-season stress. These areas are also starting to report more pods with two soybeans than three. If these are trends that continue, they will have a significant impact on final production.

Trade is starting to pay more attention to South American weather patterns and production outlooks. Recent drought conditions in Brazil have been well publicized, but it was thought farmers would still begin seeding ahead of the country’s rainy system that normally arrives in early October. This is not taking place though, with seeding just half of the normal rate. There is plenty of time to erase this slow start, but trade is already debating if production has been jeopardized. The planting of the first corn crop has advanced to a normal 26 percent, but this in an area of Brazil that has seen better rain.

The Brazilian firm CONAB has released its initial 2024/25 domestic balance sheets. Brazil’s soybean crop this year is estimated at 166.05 million metric tons. From this, exports are forecast at 105.54 mmt. Brazil’s soybean carryout this year is projected at 4.17 mmt. Corn production is predicted at 119.74 mmt. Corn exports are estimated at 34 mmt and ending stocks of 5.04 mmt. Brazil’s wheat production is estimated at 8.26 mmt. The current USDA crop estimates are for 169 mmt of soybeans, 1278 mmt of corn, and 9 mmt for wheat.

Recent focus on South American production has centered on Brazil, and we are now starting to see more attention on Argentine crop outlooks. The Rosario Exchange is estimating 2024/25 Argentine crops of 52 million metric tons on corn and 52.6 mmt for soybeans. These are both increases of 5.1 percent from last year. Officials in Argentina claim total grain and oilseed production for the country will total 143.3 mmt this year if normal growing conditions are experienced. If not, they believe production could drop as low as 128.8 mmt.

The uncertainty in Argentina is coming from the developing La Nina weather event. The last time Argentina experienced a La Nina, yields suffered considerably. The last strong La Nina was in the 2022/23 season when Argentina produced crops of just 34 mmt on corn, 24 mmt of soybeans, and 12 mmt of wheat. Even without a La Nina in place, several regions of Argentina claim they are already in dire need of moisture, mainly in western and northern areas.

The state of the global economy is again having an impact on the commodity markets. China has announced several economic recovery plans recently, including making more money available for borrowers, both for business and for personal use. China is implementing other financial stimulus incentives to make this the greatest economic relief package since COVID. There is some skepticism on whether this will work though, as credit demand is very low in China right now. This is causing ripples within the commodity market as future demand remains uncertain, especially for the red meats.

Soy oil has been posting solid gains in recent months to support the entire soy complex. Indonesian sources are reporting a sizable draw has taken place to their palm oil stocks in recent months. Indonesia palm oil stocks at the end of July totaled 2.5 million metric tons, a 10.8 percent decline from the end of June. This is the lowest palm oil supply seen in the past five years. Lower production and elevated biodiesel production are the main reasons for the decline in palm oil reserves. Indonesia now wants to take its biodiesel blend rate from 10 percent to 50 percent, further increasing its domestic palm oil consumption. Thoughts are this will add to an already growing demand base for U.S. soy oil.

There is a situation developing in the global wheat market that bears monitoring. China has announced it will be buying 37 mmt of wheat this year in an effort to support domestic values. While this may help, this only covers 26.8 percent of this year’s wheat production. China has raised consecutive record wheat crops while still importing record volumes from the global market. The Chinese government is now building storage facilities just to hold its wheat imports. It is highly doubtful this import buying will last, forcing many of the world’s leading exporters to find new sources of demand, including the United States.

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