Now that we have turned the calendar to March, we are starting to see a change in market focus and attention. One of the main changes is more interest in the upcoming U.S. planting season, mainly on acreage. Early projections are calling for U.S. farmers to plant 93.5 million acres of corn and 83.3 million acres of soybeans this year. This compares to last year’s plantings of 90.6 million corn and 87.1 million soybean acres.

These assumptions are mostly based on current futures’ values which favor corn production over soybeans. While this is accurate, soybeans have a lower cost of production, and this has been more of a factor in production recently than it has in the past. Not many farmers are willing to alter their crop rotations which also tends to limit acreage shifting.

We also tend to pay more attention to U.S. weather conditions at this time of the year. Early fieldwork will be taking place in Southern States within weeks, and before long in the Corn Belt. This puts more emphasis on U.S. weather and if there will be any disruptions to planting activity. Many regions of the U.S. remain in drought conditions and trade will be looking for indications of relief or added stress. The stocks to use on U.S. crops have tightened, and production is now equaling demand, or in the case of corn falling short. This will likely make the market hyper-sensitive to any adverse growing season weather conditions.

One of the heaviest debated topics in the market right now is South American production. Several analysts have walked back their Argentine production estimates, with may expecting sizable reductions yet to come. That said, total crop sizes in Argentina are still expected to be larger than in recent La Nina-influenced years, even though condition ratings are below a year ago.

We are now seeing more uncertainty on Brazil’s crops. Analysts have increased their Brazil soybean crop projections following better-than-expected early yields, with some adding 4 million metric tons to total crop size. We are now seeing more crop estimates between 170 mmt and 174 mmt compared to the USDA’s 169 mmt estimate. These larger estimates are tempering market reaction to soybean losses in Argentina. Some analysts are saying the same will happen on corn, but given the issues with safrinha planting in Brazil, this may not be the case.

Argentina announced that it will be cutting its export taxes until June 30th and the initial reaction in the market was negative. Initially it was thought this would create more competition for the U.S. in the global market. Clarification of the announcement shows it is not that much different than Argentina’s soy dollar programs it has offered in the past. Argentina’s government is trying to entice farmers to market their remaining old crop inventory which has stalled in recent weeks.

Data shows Argentine farmers are currently marketed on 72 percent of last year’s soybean crop and 80 percent sold on corn. This leaves farmers with roughly 12 mmt of soybeans and 8 mmt of corn to sell. Argentine farmers are hesitant to extend old crop sales as they are becoming less optimistic on this year’s crops given growing conditions up to this point. They also feel the market will improve enough to pay for holding inventory until later in the marketing year.

Trade has received clarification on China’s import ban it placed on five Brazilian export firms. Apparently, the ban is only effective on five facilities, not necessarily all of the firm’s trade. Initially it was thought this may cover 30 percent of China’s soybean needs, but this level was lowered by several groups. The ban will be in place for two months, but this is from the start which is nearly three weeks old for some. The chances of this ban benefiting U.S. trade are less optimistic as a result.

What is more of a concern for the soy complex has been updated Chinese economic data. This started with big losses in China’s tech industry from news Artificial Intelligence has developed models that could greatly impact global chip production, reducing costs considerably from traditional microchips. This caused major losses to the global tech market, including the U.S. equity market. These losses were compounded by news China’s PMI index showed economic contraction is taking place. This data only added more uncertainty to China’s already questionable commodity demand projections.

The CME group saw a considerable jump in trade volume in January. A reported 25.7 million contracts were traded in January at the Chicago Board of Trade, an increase of 2 percent from the prior year. Daily trade volumes in January were up 35 percent from January 2024. Corn volume saw an increase in trade of 60 percent, and soybean volume was up 31 percent. This volume was noted in the elevated open interest we are seeing in futures, along with record long positions. While this activity has supported futures, when attitude changes, so will market direction.

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