Despite a slow start, Brazil’s soybean planting has made record progress. The question now is what impact the slower start to soybean planting and drier soil conditions will have on the country’s safrinha corn crop, much of which is double cropped following soybean harvest. Farmer reports from Brazil indicate they are already scaling back on their intended safrinha acreage given current market conditions and forecasted returns. Given this is the crop where most of Brazil’s corn exports come from, it opens the door for higher U.S. export demand.

The soy complex has benefited from strong Chinese demand, but future Chinese imports from any source are being questioned. China has imported a large volume of soybeans recently, driving down their domestic market to a point where sales would be at a loss. The Chinese government has now stated it will increase soybean support payments at lower levels. Typically imported soybeans are highly competitive with domestic offers in China, but this move will drive China’s market even lower.

In effect, this could make it much more favorable to use China’s own reserves for processing rather than buy soybeans in today’s market. While this may pressure U.S. soybeans now, China only buys soybeans for reserves from the U.S., which is still positive for future demand.

A sure sign of building soybean reserves in China is the length of time it takes vessels to be approved for unloading. Typically, it takes five business days for paperwork to be processed in China before vessel unloading takes place. This delay is now up to 20 days. It is not uncommon for China to slow unload times on commodities to ease pressure on its domestic markets.

Questions are starting to arise over the world’s corn balance sheets. The U.S. corn crop is going to be record sized this year, but production in other regions of the globe is being debated. Argentine officials believe the country will reduce corn plantings by 2 percent this year due to low returns and elevated disease outbreaks. Brazilian officials have also indicated corn production will be down this year due to the struggles at the start of the soybean planting season. Interior corn demand is up in both countries which will also limit their exportable surplus.

The greatest loss in global production right now is forecast in Ukraine. Ukraine is forecasting a corn crop of 23.5 million metric tons this year, well below last year’s 32.5 mmt crop. A reduction to area and drought is behind the lower production figure. Ukraine exports have also been trimmed going from last year’s 28.6 mmt to a projected 17.8 mmt for this year. Ukraine has been a supplier of corn to China, and this shift favors U.S. exports.

We are now at a stage in the calendar year where beef producers, and buyers, start to pay attention to the number of cows in weekly slaughter runs. Cattle are now moving in off summer pasture, and now is when we tend to see a seasonal bump in cow slaughter as annual culling takes place. It is interesting to note that this year, cow slaughter has been very light. Elevated feeder markets are doing their job by encouraging farmers to hold cows longer, helping to add to U.S. cattle numbers.

Trade is also paying close attention to the number of heifers in feeder placement lists. This number has declined from last year by a slim volume, which is now what the livestock industry has been hoping for. An unchanged number of heifers going into feedlots means there is little change in the number being held for breeding, and the U.S. cattle inventory may not increase as much as hoped. This is adding volatility to an already choppy livestock complex.

One factor in both cattle and hog processing that is being noted is heavier live weights this year from last. Live weights on cattle are up an average of 35 pounds from a year ago. One reason for this is more steers are making their way into the supply line than last year as culling has run its course. Cheaper feed grains and improved pasture conditions have also allowed animals to remain on feed longer. This extended feeding time has also led to higher weights in hogs, with the current average up 19 pounds on the year. These heavier weights are negating the lower numbers of animals on feed, especially on cattle.

The USDA’s Animal and Plant Health Inspection Service and Veterinary Service have announced they would be suspending live animal imports from Mexico, including all livestock. This followed the finding of the highly contagious New World screwworm in Mexican cattle. New World screwworm is a parasite that burrows into open wounds on animals and can easily be transmitted to humans. APHIS has said this ban will be in place indefinitely and is a major concern as U.S. beef imports have climbed to record levels to meet consumer demand. Typically, the U.S. imports 100,000 head of cattle per month from Mexico.

The United States’ renewable fuel industry is starting to see push back from Canadian renewable fuel producers. Canada has been importing a large volume of renewable fuels from the United States recently, and now manufacturers in the country are seeing financial strain. In the first six months of 2024, Canada imported 139.92 million gallons of renewable fuels from the U.S. In 2023, the volume for the same period was 39.86 million gallons. This push back is concerning for the U.S. renewable fuel industry as Canada is our leading export buyer, and this business is needed for the industry to remain as profitable as it has been.

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