The attaché in China has adjusted the country’s corn import forecast for the 2021/22 marketing year. The attaché now believes China will import 24 million metric tons (mmt) of corn this year, 2 mmt under what the USDA is forecasting for imports. Next year’s Chinese corn imports are estimated at 20 mmt. Rising domestic corn production and more efficient use, especially for feed, is reducing the country’s corn needs.

China has recently booked U.S. corn, but not in the volume that trade has been expecting. China still has a reported 5 to 6 mmt of corn purchases in Ukraine and there is no way in determining how long it will take for this to be exported. It was thought China would have shown more urgency in shifting these purchases to other sources, but so far, this has not happened. Higher prices for U.S. corn than where previous purchases were made is one reason for this lack of shifting, but so is the fact that the Brazilian crop will be available in the near future.

We continue to see the impact of the Ukrainian war on global grain trade. Members of the European Union expect to see higher wheat demand as Black Sea supplies dwindle. EU wheat exports are now forecast at 40 mmt for 2022, up from last year’s 33 mmt in sales. The EU is also expecting to see corn imports decline from 14 mmt in 2021 to just 9 mmt in 2022. EU members are taking measures to increase their own corn production to fill this void but may need to look at non-traditional sources for coverage.

When the Ukraine war started trade immediately started to make projections for added demand for the United States, especially on wheat. So far little of this has surfaced. In fact, the United States has not seen any increase in wheat demand since the start of the war. One reason for this is price, as the United States is the highest-priced source for wheat in the global market. Another is logistics as buyers can find wheat closer to where it is needed, especially in the Asian market. The fact both Russia and Ukraine are still leaking out wheat has also tempered demand for U.S. offers.

Questions are starting to arise on Brazilian export forecasts. Recently the official Brazilian group CONAB estimated the country’s soybean exports at 77 mmt. This is just 3 mmt under last year’s exports even though the crop is roughly 12 mmt smaller. CONAB pegs Brazil’s corn exports at 30 mmt for 2022/23 which is up just 2 mmt, even though production is forecast to be at least 25 mmt larger. Even with elevated domestic demand this corn export figure seems low.

Even with this uncertainty, the United States is seeing heavy pressure from Brazil in the global soybean market as buyers focus on new crop supplies from that source, mainly China. Last week the United States loaded out 27 mbu of soybeans. During the same week Brazil exported 101 mbu of soybeans. Cumulative new crop soybean exports out of Brazil already total a record 783 mbu. It is believed that at the rate Brazil is making exports they will be out of soybeans by July, opening a window for U.S. exports of old crop inventory.

One number that is starting to receive more attention in Brazil is the country’s corn yield. Sources in Brazil claim this year’s average corn yield in the country will be 102 bushel per acre. While Brazil has adopted several farming practices that will elevate yields, an increase in the use of GMO seeds will help considerably. As this yield per acre rises Brazil will apply more pressure to the U.S. market, even if plantings remain constant.

High input costs have been a story in the market for the past several months with most attention on their impact on grain production. We are now seeing this affect other crops with Australia claiming it will scale back on canola plantings due to the elevated cost of production. Analysts in the country claim canola production this year will total 4.7 mmt, a 26 percent reduction on the year. Normally this size of a reduction would not be a market topic, but the tight global oilseed inventory is putting emphasis on any alteration to balance sheets.

Cattle slaughter numbers are starting to increase, which is not surprising at this time of year. Packers are starting to build beef reserves ahead of the summer grilling season which is supporting both cash and futures values for cattle. One factor being noted with this elevated cattle slaughter rate is lower weights per head. This is giving trade the indication that beef cattle is moving quicker as high feed costs are starting to pressure margins and impact feeder returns. Hog slaughter has slowed in recent weeks which is also seasonal, and typically rebounds later in the summer months.

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