Trade is starting to show more interest in global balance sheets than those of just the United States. For corn and soybeans, these are expected to increase considerably from this year to next. The world stocks to use on corn is projected at 12 percent for the 2023/24 marketing year, the highest level in four years. Soybean stocks to use are expected to total 31.7 percent, which would be the highest in five years. Larger crops in the United States and a rebound in South American production are behind these larger numbers. The world stocks to use on wheat is expected to be a nine-year low but still come in at 30 percent. Improving weather conditions and elevated planting may elevate the wheat number as well as the year progresses.

Even if crops are not as large as projected, changes to demand will also impact ending stocks. The USDA is currently using some very large demand numbers in their balance sheets. This is from a historical tendency for demand to increase in years with larger crops as commodity values tend to slip lower in such times.

While this can happen, the state of the global economic markets may limit import buying interest this year. This is especially the case for the leading commodity buyer China, which has shown a slower recovery from COVID than anticipated. Even without economic concerns, the larger inventory projections have reduced any interest of forward contracting by global importers.

The International Grains Council (IGC) has raised its world grain production forecast to a record 2.294 billion metric tons (bmt). This is just above the previous record of 2.293 bmt set in 2021/22. This increase is the result of a 9 million metric tons (mmt) increase to the world corn crop to 1.21 bmt. Larger corn crops in Brazil, China, and the U.S. contributed to this elevated forecast. IGC trimmed world wheat production estimate 4 mmt due to the smaller crop in the U.S., putting it at 783 mmt. This is down from last year’s record wheat crop, but still more than what was produced in the 2021/22 year.

Global weather patterns have become more of a factor in price discovery. This started with a shift from the La Nina event to an El Nino which does bring warmer and drier conditions to the U.S. and other regions of the world. These concerns were elevated by the United Nations claiming the next five years could be the warmest on record. The U.S. believes there is a 65 percent chance temperatures over this span will be 2.7 degrees warmer than average and there is a 98 percent chance one year will be record warm. These conditions are favorable to get planting done this spring but could easily pressure yields as the year progresses.

Brazilian farmers have been slow on making new crop soybean sales this year, and now we are seeing the same on corn. To date, Brazilian farmers have sold 24.3 percent of their projected Safrinha production. This compares to 31 percent being sold last year. Concerns over delays to deliveries due to port congestion are keeping selling to a minimum, but so are thoughts corn values will rally later in the marketing year. Speculation Argentina will need to import a large volume of corn is also keeping sales limited at this time. This will extend the competition the U.S. will see from Brazil on our yearly corn sales.

China’s soybean buying is starting to be questioned. China has recently imposed new import regulations that have greatly slowed the unloading of vessels. It is now taking upward of three weeks for vessels to be cleared to unload compared to the normal three-five days. It is believed that China is doing this to help support domestic soybean values, but also shows they have adequate soybean reserves.

These delays have also supported China’s crush margins which are again positive. Long range outlooks show China’s margins again turning negative late summer into fall as cheaper soybean supplies out of South America are depleted and higher priced imports from the United States take place. The larger crops that are expected to be produced in South America this coming year will likely keep this trend going and further reduce the U.S. share of China’s soybean imports.

China continues to take steps to limit its use of corn and soybeans in feed rations. The most effective way the country has found to do this is elevated use of wheat in feed rations. Not only is wheat readily available for China but it will help the country cover the short supply of meal out of Argentina. Chinese officials claim they have reduced their corn share of feed rations to 36.6 percent, down 1.3 percent from normal, through the use of wheat. Soy meal use in feed rations is down 1.9 percent to just 12.5 percent of the total. China has long been the world’s leading importer of soybeans and in recent years corn, but now is the top wheat importer as well.

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