China has announced that studies with GMO crop production in the country have raised yields by 11.6 percent. While GMO production is not approved in China, this data will likely speed it up as China aims to become less dependent on imports to cover needs. Current average yields in China are 145 bushels an acre on corn and 40 bushels an acre on soybeans, well below most other grain and oilseed producing countries.

While an El Nino is favorable for South American growing conditions, its slow build this year is still causing drought conditions in some regions, with most attention on Argentina. Widespread rains are not forecast to develop in Argentina until we get into October this year. This may cause a delay in the start of the corn planting season in the country.

We have seen a shift in Argentine planting in recent years though, with corn seeding being split into two windows. A small number of acres are seeded early, and the bulk of corn planting takes place later on. This is being done to help miss the most stressful growing conditions of the year and has improved yields. Argentine farmers are currently forecast to seed 21 million corn acres this year, but sources believe that if rains are delayed, we may see a reduction to this number.

Dry soils have not been a concern in Brazil and corn planting is now underway. An estimated 5 percent of Brazil’s first corn crop has been seeded, which is twice the normal pace. This is giving trade the idea that corn harvest will be early this year as well. The first corn crop in Brazil is typically used to cover domestic needs but the large Safrinha harvest from this year will likely elevate Brazilian corn stocks all year and allow for some of the first crop to be exported.

While much of the attention in Brazil focuses on corn and soybean crops, the sugarcane crop in the country is expected to be record large this year. This would put the cane crop 7 percent larger than last year when drought impacted production. Historically Brazil has produced much of its ethanol out of sugar but poor crops in recent years have elevated corn-based ethanol manufacturing. Brazil is expected to produce 9 billion gallons of ethanol this year with 7.3 million from sugar and 1.6 million from corn.

The availability for Brazil to use sugar for ethanol manufacturing will allow more corn for other uses, including to export in Argentina to help cover their production losses.

The August cold storage report showed us that as of July 31st, total red meat supplies in the United States were down 14 percent from July 2022. Beef in cold storage at the end of July totaled 420 million pounds, a 2 percent increase from June, but well below last year’s 511.8-million-pound inventory. Pork in cold storage was down 3 percent at 473.8 million pounds and below the 526.5 million pounds from July 2022. Pork belly inventory came in at 51.77 million pounds, a large 26 percent decline from June, but above last year’s 42.84 million pounds.

One of the biggest impacts in exports in recent weeks has been the strength in the U.S. dollar. This is making our commodity offers more expensive for an importer, even if commodity futures soften. In recent weeks this has been more of an issue for beef and pork than grains. Current U.S. beef export for the year stand at 661,300 tons. This is down 150,000 tons from a year ago. Pork demand is better at 1.24 million tons which is up 150,000 tons on the week. Even with pork demand up on the year, it is down from recent history.

The July fats and oils report showed us 185 mbu of soybeans were crushed in the month which was just above the average trade guess. This compares to 175 mbu of soybeans crushed in June and 181 mbu of industry consumption in July 2022. This produced 2.18 billion pounds of crude soy oil, an increase of 5 percent from June but steady output from July 2022. Given the expansion in the U.S. renewable fuel capacity of 100 percent from last year, the U.S. will need to maintain this high crush pace which will help offset any potential reduction to export demand.

The grain crushing report for July has also been released and showed 454 mbu of corn was processed for ethanol in the month. This was just over the average trade guess. July ethanol demand on corn was up 3 percent from June and 2 perent more than in July 2022. Dried distiller grain production for the month totaled 1.78 million tons. This was nearly equal to June’s production but 8 percent less than in July 2022.

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