Harvest is progressing across the United States, and as it does, trade is trying to determine what final crop sizes will be. It will take several weeks for this to be known however, possibly not until harvest is fully complete. The real question in the market is what will be done with these new crop bushels. It appears as though farmers will store as much of their production as possible in hopes of higher prices later in the marketing year. This is keeping basis firm in several regions of the United States as buyers want to keep new bushels flowing.

All attention in the United States is on the current harvest season, but in South America all attention is on planting. As the planting season gets underway in South America, trade is shifting its focus to potential production, especially in Brazil. We have seen several estimates on the next crop season in Brazil, but now the country’s official ag department has released its projections.

The Brazilian firm CONAB has released its initial projection on the country’s 2022/23 crops with record expectations on both. For soybeans, CONAB is predicting a crop of 152.4 million metric tons (mmt), an increase of 21.3 percent from this year’s 125.5 mmt crop. Soybean exports for 2022/23 are projected at 95.7 mmt, well above this year’s 78.3 mmt. Brazil’s corn production is projected at 126.9 mmt, up 12.5 percent from this year’s 112.8 mmt. Brazil’s corn exports are forecast at 45 mmt this coming year versus 37 mmt from last year’s crop.

Elevated plantings are the primary reason for this elevated output, especially on soybeans, as Brazil will expand its soybean acreage by 4 percent this year. This keeps a trend of increased plantings intact that began in 2006. Brazil is also expected to cut back on initial corn plantings but expand its Safrinha crop. This is from the ability to miss much of Brazil’s worst weather conditions with a later planted crop. Total plantings in Brazil are forecast to increase by 6 million acres.

While these factors may in fact lead to larger Brazilian crops there are factors that may limit production, primarily weather. South America has been affected by a La Nina weather event for the past three years and there are indications it will last another year. If so, we could easily see smaller crops than the ones being predicted. The unknown on a La Nina is how long it may last. Current models indicate the event will last into 2023, but that does not indicate how strong it will be, which is what really impacts crop sizes.

Trade is also starting to pay more attention to the start of the corn planting season in Argentina. So far corn planting has been very slow in the country as farmers wait for much needed rains to fall. The current corn planting pace in the country is just one-third of the normal rate seen on this date. Some of this delay may be to avoid the worst of the current La Nina conditions, especially with models indicating it will break down in early 2023. Trade is still interested to see if farmers in Argentina shift some fields intended for corn to soybeans if drought conditions persist.

We are already starting to see more attention on the next production season in the United States with an emphasis on costs and acreage, especially on corn. A few forecasts have been released with corn acreage for the 2023/24 production season at 94 million, well above the 89.8 million that were planted this year. There are already some doubts over this size of an increase as nitrogen fertilizer values are again rising. This is mainly from ammonia appreciating 26 percent in just the past week. If the cost of production on corn continues to rise, we may see less interest in expanding plantings.

Not only is corn production being monitored in the United States for the upcoming year, but around the world. The European Union continues to suffer from drought which is cutting production. Not only is this an issue for the current corn crop, but this may also reduce seed availability for next year’s plantings. If Ukraine continues to struggle with production this will increase EU corn imports and likely demand for U.S. corn as well. At the same time a record Brazilian corn crop is being forecast which will compete with the United States in the global market.

Talks between the United States and Mexico on that country’s upcoming change in GMO corn policy are starting to increase. At the present time Mexico’s president wants to phase out GMO corn and glyphosate use by the year 2024. The obvious concern is what this would mean for U.S. exports. Mexico’s ag minister says the stop would have no impact on U.S. yellow corn exports that is used for feed purposes. This decision would impact white corn imports though which account for roughly 19 percent of U.S. exports to the country.

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