Several of the world’s leading commodity producing countries are starting to offer incentives to farmers to expand production. The main one of these is China, where farmers are being offered one-time incentives to expand crop sizes, including help in paying for crop inputs and fuel needs. China has also indicated it will raise government subsidies to provide more of a safety net. The European Union is also considering such measures, and it would not be surprising if Brazil does as well.

There are thoughts we will see increases to export demand for U.S. corn and soybeans in future balance sheets, mainly on soybeans. The United States currently has a combined 676 million bu (mbu) of old and new crop soybean sales on the books. This is a 51 percent increase from last year and a record for mid-March. Outstanding old and new crop corn sales currently total 893 mbu, down 29 percent from a year ago.

Trade is not necessarily concerned with the sluggish corn sales up to this point though as China is just getting to its seasonal window of corn buying. China tends to import corn from now until late summer and right now there are few other choices in the global market than the United States. China does have a reported 6 million metric tons of corn purchases in Ukraine, but it may take months for this to be exported given the war damage that has already taken place to the country’s infrastructure. 

We are starting to see a shift in the attitude of the global commodity market. We are now starting to see more buyers look at cheaper alternatives to their traditional import products, mainly on feed grains. This is mostly being seen in China where low hog values are limiting what feeders can afford at current market levels. 

In Brazil we are starting to see more interest on the planting of the country’s Safrinha crop. This has started to wind down as an estimated 94 percent of the crop is now seeded. We are also seeing a rapid harvest pace on the summer corn crop in Brazil. It is quite likely the combination of these will put Brazilian corn on the market sooner than last year.

Inflation is starting to have more of an impact on commodity outlooks. Rising costs are starting to show some signs of impacting consumer spending and will likely continue to do so. The most interest is on energy and food demand and how consumers adjust spending, especially if they start to see less disposable income. This is especially a concern in the U.S. livestock industry as we are right in front of the seasonal increase in grilling demand.

Some countries are taking the approach that if they lower or totally remove biofuel blend rates it will help with rising food costs. So far this appears to be more of a case on biodiesel due to tight vegetable oil supplies with very few alternatives. While this may help lower food costs, it would likely raise energy costs, and have little overall relief on consumers.

Trade is closely monitoring Brazilian exports which is not uncommon once their shipment season gets underway. Given current basis values and outlooks in Brazil, indications show the country will be done with the bulk of their soybean exports by August. This was thought to have been the case last year as well and Brazil was still exporting out soybeans almost until their next harvest started. The soybean crop in Brazil is smaller this year and their carry-in was less which will likely shorten the window this year.

We are beginning to see more spring and summer weather outlooks for the United States. Spring conditions are forecast to be near normal form much of the Corn Belt. Summer weather maps indicate elevated temperatures for much of the central and southeastern U.S., including nearly all of the Corn Belt. Precipitation is forecast to be below normal in the Western Corn Belt and Plains which may extend the current drought into the growing season. 

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