Soybean consumption in the United States has shown no sign of slowing in spite of rationing attempts. According to data from Ag Resources, U.S. soybean consumption for the marketing year currently totals 3.37 billion bu (bbu). This is a record pace and 35 percent greater than last year. It is also 11 percent more than the previous usage record. This demand shows no sign of slowing into next year either, and will likely keep soybean reserves tight.

When it comes to U.S. soybean usage most attention has fallen on exports, but just as much should be placed on domestic crush. Cumulative crush through March currently totals 1.3 bbu. This leaves just 900 million bu (mbu) of needed crushings through the end of August to meet the USDA yearly projection of 2.2 bbu. Crush will only need to average 150 mbu per month which should be easy to achieve. The unknown in this scenario is if elevated wheat feeding and distiller grain availability will reduce meal demand.

One of the most questioned numbers in the global market right now is the size of the Brazilian corn crop which is currently predicted at 109 million metric tons (mmt). This ultimately hinges on the size of the Safrinha crop. Many analysts claim the crop will be smaller given recent weather and forecasts that indicate stress will continue. While yields may be down, Brazilian farmers are expanding plantings given record returns. Right now the break-even yield on corn in Brazil is 40 bushels per acre which has kept planting moving.

We are starting to see as much attention on the Brazilian corn crop quality as we are on yields. According to sources in Brazil the corn crop is currently rated 62 percent Good/Excellent. This compares to 90 percent G/E to start the month.

As it does in the United States, the greatest concern with a low rating is what is may mean for test weight. It is not uncommon to see low test weights on corn under drought conditions. Not only does this mean more bushels will need to be consumed, but that buyers may be less willing to pay for the corn that is produced. In turn, the United Staes could see elevated demand even after the Safrinha crop is harvested.

We are also seeing debate on the Argentine corn crop size. Harvest is slow to advance in Argentina, with just 14 percent of the crop out compared to last year’s 33 percent. Yields are better than expected though, causing some firms to increase their crop projections. One of them is the Buenos Aries Ag Exchange, who puts the crop at 46 mmt, up 1 mmt from their previous prediction. This is still 1 mmt under the latest USDA crop estimate.

We are starting to see a shift in market focus which is not uncommon at this time of the marketing year. When it comes to the old crop contracts, futures are currently driven by little other than demand and ending stocks estimates.

On new crop there are more variables that are monitored and more options for price discovery. The main one right now is acres and how many we will see on each crop. Any indication that we will not see adequate plantings of either crop and futures will react accordingly. We are also at a point where weather is becoming more of a factor for new crop values. Given the projections for ending stocks to remain tight into new crop we will see more reaction to any factor that may reduce production. Export demand is a factor in new crop commodity values as well as old crop, and in some ways, more of an issue.

We are starting to see more interest on new crop export sales of U.S. corn and soybeans. We have seen an active start to export sales for those contract months, but in recent weeks, these have trailed off. The most closely watched of the buyers is China who has been the world’s leading commodity importer. This lack of buying could indicate China is either comfortable with global production and its ability to satisfy needs, or that the country’s overall demand is starting to fade.

Trade is paying more attention to the topsoil moisture levels across the Corn Belt. Iowa is currently reporting a 29 percent deficient topsoil moisture level, and Minnesota is 22 percent short. The greatest deficiencies are in the Dakotas, with North Dakota 78 percent short and South Dakota 58 percent short. These conditions are now moving into the Eastern Corn Belt with Indiana being 18 percent short and Illinois 9 percent short on topsoil moisture. While these conditions can be favorable for planting, we will need to see rains develop soon to prevent possible yield implications.

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