We are seeing more disagreement in the market over how much recent weather has impacted yields. Current U.S. corn yield estimates range from 173 bushels per acre to a high of 181 bushels. Most analysts are projecting a corn yield close to the latest USDA estimate of 177.5 bushels per acre. Soybean yield has also been trimmed, with yield estimates from 50 to 52 bushels an acre. While this range is very tight, an average yield at the low end of the range would put the U.S. in a rationing position. The question with this is how much demand has already been cut given the rally in futures over the past week.

Trade is also starting to look more at the 2023/24 South American production estimates that are considerably larger than this year. This is especially the case on corn, where 2023/24 South American production is expected to increase 30 million metric tons (mmt) from this year as more normal weather patterns return to the countries. The market is becoming aware it doesn’t need a huge crop out of the U.S., but rather one that is big enough to bridge the gap between South American harvests.

One of the most debated factors in the market right now is Chinese demand. The attaché in China has the country’s 2023/24 corn imports projected at 23 mmt. Chinese officials believe the country will only import 17.5 mmt as feed wheat use continues to displace corn demand. The attaché is also projecting Chinese soybean imports of 99 mmt compared to estimates for 94.2 mmt of imports from in the country.

Chinese import data for the month of June has been released. During the month, China imported 1.85 mmt of corn, a 16.3 percent decline from June 2022. China continues to substitute feed wheat into rations, which is cutting corn demand and elevating wheat imports. June wheat imports into China totaled 820,000 metric tons, an increase of 58.7 percent from last June. China’s June soybean imports came in at 10.27 mmt, a 24.5 percent increase on the year. Year to date Chinese imports are down 11.5 percent on corn but up 62.1 percent on wheat and up 13.6 percent on soybeans.

China also imported 130,000 metric tons of pork in June. Year to date pork imports now stand at 940,000 metric tons, a yearly increase of 16.5 percent. China’s beef imports in June totaled 230,000 metric tons to bring the yearly total to 1.23 mmt. This is 6.8 percent more than last year’s pace. The ending of China’s strict COVID restrictions has been beneficial to all imports, while ongoing economic concerns have limited consumer demand.

Brazilian officials are already releasing estimates on next year’s crop sizes. The Brazilian firm Safras is expecting the country to produce a soybean crop in 2023/24 of 163.2 mmt compared to 156 mmt this year. Record plantings of 111 million acres is the primary reason for the higher crop, but so is a shift to an El Nino weather pattern which favors the country’s crops. Safras is projecting a Brazilian corn crop of 137.4 mmt in 2023/24 compared to 133 mmt this year. These crops sizes will further pressure the U.S. share of global commodity trade.

The United States and European Union are fighting the use of used cooking oil in biodiesel production. This is mostly from Chinese imports, which are being sourced at a sizable discount to soy oil. Thoughts are this is contributing to the decline in soy oil consumption for biodiesel from an average 46 percent of manufacturing content to just 39 percent at the present time. The U.S. already has high tariffs on other vegetable oils, mainly on palm oil from the Asian market.

The July cattle on feed report has been released and verified the lower numbers that were expected. The total number of cattle on feed came in at 11.2 million head, 98 percent of last year’s total. June placements were a surprise at 1.68 million head. This was 103 percent of last year’s total and well above trade guesses. June marketings came in at 95 percent of June 2022 with 1.96 million head which was also above trade expectations.

The total U.S. cattle and calf inventory as of July 1 was also released. This data showed the U.S. cattle inventory stands at 95.9 million head, 97 percent of last year’s total. Beef heifers were 98 percent of a year ago and dairy heifers came in at 97 percent. The current U.S. calf inventory is also lighter than a year ago. The 2023 U.S. calf crop is estimated at 33.8 million head, 98 percent of 2022.

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