While there are production concerns on the U.S. crop, trade is starting to show more attention on the demand side of balance sheets. Old crop corn sales are down a large 34 percent from last year and new crop sales are already 39 percent behind where they were a year ago. This has new crop corn bookings the lowest since 2019. Price is a major issue for corn demand right now, but buyers are also looking at a 2023/24 South American crop that is forecast to be over 20 million metric tons (mmt) larger than this year. Even if the South American crop is not this large, buyers are showing no urgency in extending coverage at today’s values.

Total South American soybean production this coming year is expected to be at least 30 mmt larger as normal weather conditions return. Same as with corn, importers are willing to wait and see if this is accurate before extending coverage at this time. This is being reflected in new crop export sales that are down 65 percent from last year.

Data shows that for the month of June, China imported 10.27 million metric tons (mmt) of soybeans. Of this volume, 9.53 mmt originated from Brazil, an increase of 31.6 percent from June 2022. The U.S. share of Chinese imports for the month was 528,000 metric tons, a decline of 32 percent from last year. Even with this decline, cumulative U.S. exports to China are up 2 mmt from a year ago. Chinese soybean imports are expected to remain elevated through the remainder of the year, but ongoing economic worries in the country may limit total demand.

Brazilian officials are reporting record July exports of a combined 18.3 mmt for corn, soybeans, soy meal and wheat. This would put calendar year to date exports of these commodities at a record 106.1 mmt, well above the previous record set last year at 89 mmt. China is by far the largest importer of Brazilian commodities, but more business is being done with Argentina this year to cover the shorter crops in that country. Given projections for even larger Brazilian crops next year these record exports are unlikely to slow for the foreseeable future.

One development that has come with the elevated fighting in the Black Sea is renewed concerns over global food security. Much of the grain that came out of the Black Sea went to developing countries, several of which were in Africa. Now that these exports are delayed these buyers need to look for alternative sources, even if they already have purchases made with Ukraine.

At the same time, many of the worlds other food grain suppliers have placed restrictions on exports to maintain adequate reserves themselves. Tighter credit and volatile world currency values have caused further strains on world food trade, including from the U.S.

While still weeks away, trade is already starting to look to this fall’s upcoming harvest. The main point of interest is obviously what we will see for U.S. production, but other factors are starting to take precedence, mainly what we may see for country movement. Over the past few weeks, we have started to see more movement of stored old crop bushels, both from producers and commercial elevators alike. This is not that surprising given the rally we have had in futures values in recent weeks.

There may be another factor for elevated country movement as it is not uncommon to see higher farmer selling when developing crops looks better. The improvement we have had to crop ratings and more favorable weather outlooks are giving farmers hope of higher yields.

The question now is what may happen this fall when harvest begins. Many farmers and grain terminals across the Corn Belt will be empty and able to store a large volume of harvest bushels. Given thoughts the markets will remain strong may keep inventory locked down until later in the new crop marketing year, especially with adequate cash flow still being reported. Interior basis has softened in recent weeks on higher movement, but this may be temporary if as much inventory is stored as suspected. 

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