More details on the Market Facilitation Program (MFP) payments have been released. This is part of the payment program that has been designed to help offset economic losses in agriculture that have been caused by ongoing trade issues between the United States and China.

Signup for the MFP payments will be from July 29-Dec. 6. The payments will be based on a per-county scale and range from $15 to $150 per acre depending upon the impact that the trade war has had. Payments will come in three tranches, with the first being in mid- to late August.

The second and third payments will be in November and January 2020, subject to trade conditions.

While the conditions of the U.S. corn and soybean crops have improved, there remains concern over the maturity pace. Field scouts claim both crops are currently behind their normal maturity levels by 2-4 weeks. This is not a major lag, but it is enough to cause some concern for how the crops finish.

One is the possibility that crops will be finishing out under late-summer heat. Another is that crops could be impacted by an early frost or freeze. Even if neither of these would impact yield, they could definitely affect quality. These possibilities are keeping a certain amount of risk premium in the market even if current conditions are not as threatening.

We are starting to see more attention focused on commodity demand, mainly on soybean exports to China. Chinese officials have trimmed their soybean import projections on the heels of the ongoing African swine fever (ASF) outbreak. Chinese officials now believe total soybean imports this year will fall 3 million-4 million metric tons short of initial estimates.

The question is when this may show up in USDA projections. The main reason for the large reduction we are seeing in Chinese soybean demand is the drop in pork production following the ASF outbreak. In June alone the Chinese hog herd shrunk by 26 percent.

We are now starting to see a build in Chinese poultry production, though, which may offset some of the loss in feed demand for pork. Poultry production in China is up 5.6 percent from a year ago as this takes place.

There is another question being asked when it comes to soybean demand. The U.S. has already sold more soybeans this marketing year than expected, which is a positive sign. At the same time, soybean shipments are not matching sales.

This gives us the indication we will see more sales rolled from old crop to new crop than usual, or possibly canceled. It goes without saying this will give us a higher soybean carryout than currently projected.

Winter wheat harvest is progressing across the U.S. at a quick pace due to the hot, dry weather conditions. The most activity has been in the West, but we are now seeing the East get started as well.

Yield reports are variable, but so far appear to be average and in line with expectations. Quality is also variable, but reportedly higher in the West as well. The wet spring and growing season in the East are the primary cause of the variance.

Trade is showing concern over the latest U.S. soybean crush report. The crush total for the month of June was 148.8 million bushels, the lowest total in the past 21 months. Market bulls quickly credited this to the flooding in the Midwest that slowed processing.

While this may have been a factor in the low usage, it does not reverse the trend of four consecutive lower crush totals than a year ago. This is stemming from the lack of export business the U.S. is seeing and increased competition from South America, mainly into China.

We are starting to see estimates released surrounding next year’s Brazilian soybean production. The firm Safras and Mercado released a projection for a record 123.8 million metric-ton soybean crop in Brazil for the 2019/20 crop year. This would be a 4.7 percent increase from this year’s 118.2 million tons.

It is believed Brazilian farmers will seed 90.4 million acres of soybeans this coming year, a 0.8 percent increase from last year. This puts Brazil on track to surpass the U.S. as the world’s leading soybean producer and supplier.

The U.S. is set to see its Russian competition in the global commodity expand. Russian officials have announced they will be investing $70 billion in that country’s grain infrastructure in the near future. This will cover storage facilities as well as transportation upgrades. By doing this, Russian officials believe their grain production will expand to 150 million metric tons, compared to this year’s 118 million.

The protein content of this year’s Brazilian soybean crop is getting market attention. Reports indicate the protein content has dropped slightly from last year’s 37.1 percent to an average of 36.8. The initial reaction is this would deter Chinese demand, but that may not be the case.

The lower volume is still within Chinese requirements and competitive with the U.S. The price difference, including tariffs, is also a factor that favors Brazilian soybeans over U.S. beans.

Karl Setzer is Commodity Market Analyst for AgriVisor. His market commentary can be found on Twitter via @ksetzergrains

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources are believed to be accurate.