One of the most negative factors for the U.S. soy complex right now is the start of the Brazilian harvest. Brazil’s soybean harvest is just getting underway, and activity will ramp up into early February. Normally we see an earlier start to the Brazil harvest but delays to the start of the planting season pushed crop maturity back.

Soybean exports will start to become more numerous by mid-February, and by March nearly all import interest will be focused on Brazil. This will slow U.S. soybean exports, but for how long is being debated. Brazil’s domestic soybean demand is increasing for both feed and biodiesel manufacturing, and this is limiting the country’s export ability, even with larger production.

The start of the Brazilian soybean harvest and export program is historically favorable for U.S. corn exports. Brazil export terminals are designed to handle one commodity at a time. When the Brazil soybean export program gets underway corn loadings from the country tend to halt, and demand shifts to the U.S. We may not see as much of a shift in demand this year as Brazil has been mostly absent from global trade for several weeks now.

Ukraine has reported its 2024 grain production totaled 55 million metric tons, up 1 mmt from the previous government prediction. Ukraine officials are predicting 2024/25 marketing year grain exports of 40.3 mmt. This will fall well short of the 51 mmt that was exported in the 2023/24 marketing year. Poor weather conditions and ongoing fighting with Russia have greatly impacted Ukraine’s export ability. The yearly grain exports are now at 20.5 mmt for corn, 16.2 mmt for wheat, and 2.9 mmt of barley.

Chinese officials have raised their 2024 grain production forecast to an all-time high of 706.5 mmt. This would be an increase of 1.6 percent  from 2023. Grain production is split with corn at 294.92 mmt, rice at 207.5 mmt, and wheat at 140.1 mmt. Favorable weather, expanded acreage, and improving farming practices are the leading factors for the elevated production. China is putting the country’s 2024 soybean crop at 20.65 mmt, a 1percent decline from 2023. This is mainly from a 1.4 percent decline in planted acres. This may lead to an increase in 2025 soybean imports, but not by a significant amount.

One of the greatest unknowns in global grain trade right now is Chinese demand. China bought a large volume of corn for import, including from the Black Sea. China did this with the thought domestic demand would continue to rise as the country recovered from its African swine fever that caused large scale hog culling. China’s interior corn production was larger than expected this year though, and when combined with these import purchases, stocks are now building even with elevated consumption. China’s port stocks of corn are now the highest they have been since 2018.

The Chinese government has announced that it will suspend its sales of imported corn into the domestic market. China imported a large volume of corn this year, and when combined with a record domestic crop, has created a near burdensome corn supply in the country. This has driven Chinese corn values to their lowest level in nearly five years. By suspending these corn auctions, China hopes to improve its domestic market values.

 A concern with this Chinese corn inventory is that much of it is being stored in less than optimum conditions. China lacks adequate grain storage and much of the country’s inventory is in open air piles. China has recently experienced above normal temperatures and precipitation, and this is creating ideas that even with ample stocks, much of China’s corn will again be lowered to feed or industrial grade usage. This may lead to even more Chinese corn imports for blending.

We are seeing a little risk premium added to the market as forecasts have turned drier in several parts of Argentina. Brazil weather remains favorable, but pockets of crop stress are noted there as well. One of the main ones is in Rio Grande do Sul, which is a major grain producing state. These conditions come as the Climate Prediction Center has revised its La Nina outlook. The CPC now has the odds of a La Nina being in place through February at 70 percent. La Nina events tend to lower production in Southern Brazil and Argentina, even in years with weaker systems such as the one currently being forecast.

Harvest is still fresh in everyone’s mind across the Corn Belt, but attention is already shifting to next year’s production season. This has made the U.S. acreage debate again a topic of market discussion. The current new crop corn and soybean price ratio stands at 2.2:1. This tells us it takes 2.2 bushels of new crop corn to equal the value of 1 bushel of new crop soybeans. Typically, this spread is closer to 2.5:1. The tighter the spread the more it favors corn production. Even with elevated input costs, producers across the U.S. claim they may plant more corn this coming year on hopes of higher returns.

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