Analysts are starting to revise their U.S. acreage projections for this coming year given recent market activity. Ever since the October balance sheets were released the soy complex has pushed for acres to rebuild the U.S. soybean supply. As a result, analysts are now projecting U.S. soybean plantings of 89.2 million acres compared to last year’s 83.2 million and the September estimate of 87.2 million acres. Corn acres are now expected to total 90 million, under the previous estimate for 93.7 million and last year’s 91 million acres. While possible, there are several factors that will determine actual acres between now and next spring.

Basis values across the interior market are starting to show their seasonal volatility build. Typically, the start of harvest and inflow of new crop bushels starts to pressure basis values. Basis may not deteriorate this year as much as normal though as buyers want to keep as much grain moving as possible. One reason for this is that in recent years it has proven difficult to encourage movement once the grain is in on-farm storage. Another reason is the recent announcement of additional subsidy payments that farmers may use for cash flow instead of selling grain.

Gulf basis is also volatile, with considerably better bids being posted than a year ago, mainly on soybeans. At the present time, soybean bids at the U.S. Gulf are averaging $1.45 over Chicago futures. A year ago soybean bids were just 45 cents over futures. This strength in soybean basis is a result of the Chinese demand we have seen in recent months.

How long we see this strength in soybean basis depends heavily upon China. China is now thought to have needs covered until the South American harvest gets underway and their exports start up. China has also been buying soybeans to place in reserves, but following the recent rally, this is starting to become uneconomical. If China slows their buying it will greatly alter the recent opinions on soy complex balance sheets.

Sources in Brazil are starting to increase their soybean export forecasts. It is now believed that Brazil will export 82 million metric tons of soybeans in 2021, a 1.2 percent increase from 2020. Soy meal exports are also expected to increase year to year by 4.7 percent. This would put sales at 17.8 million tons. These volumes are based on a 131.7 million metric tons crop, which would be a 7 million ton increase from this year’s production.

South American soybean production on a whole is expected to increase this year. Combined soybean production in South America is now projected at 200 million metric tons, a 9 million metric tons increase on the year. It is believed that production this high will be able to cover the rise we are seeing in Chinese imports, leaving U.S. sales little changed on the year. These numbers all depend upon weather though which has not been ideal up to this point.

Much of the interest on South American production has been on soybeans, but we are now seeing just as much on corn. Argentina has pulled all of its export offers as concerns mount over production due to recent drought. Brazil has seen its corn rally to a $2 per bushel premium to Chicago futures. Sources in South America claim the countries are not out of corn but want to limit their sales until they are assured domestic usage will be covered.

More estimates are being released on the Argentine corn crop. A year ago Argentina produced a 51 million metric tons corn crop, but drought is thought to have cut that number this year. The average estimate now is for a 45.6 mmt corn crop, and that may decrease even further if drought conditions persist. Reports indicate that if drought conditions continue, we could see some later planted fields shift to soybeans instead.

One country the United States is not seeing as much competition from Ukraine in the global grain market as it did a year ago. Ukraine is three months into its export year and has only shipped out 10.77 million metric tons of inventory. During the same period a year ago Ukraine had shipped 12.2 million metric tons of grain. The biggest decline is on corn where exports only total 619,000 metric tons compared to the 1.93 million metric tons of a year ago.

Dredging is starting to get underway on the lower Mississippi River. The lower 175 miles of the river are going to have this happen to allow for heavier barge movement to the Gulf. Sources claim they will be removing 50 feet from the riverbed allowing barges to draft lower and carry more cargo, especially commodities. While we have seen more products leave the United States through the Pacific Northwest, the Gulf still handles half of all U.S. commodity exports. This dredging will allow for quicker shipments to the Gulf and also lower transit costs.

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