The U.S. Climate Prediction Center has revised its La Nina forecast. The CPC now believes there is a 70 percent chance of a La Nina being in place from now through October. This probability increases to 79 percent from November through January 2025.

Trade is in general agreement that this time frame means the weather pattern will have little impact on U.S. production this year. The main focus will again be on South America, mainly Argentina, as the last La Nina cut grain and soybean production in that country by 50 percent. While there are elevated chances of a La Nina forming, the unknown is how long it will last and how strong it will be, as those are the factors that impact commodity production.

The Brazilian crush firm ABIOVE updated is soybean balance sheets for the country. ABIOVE now sees the 2024 Brazilian soybean crop at 153.2 million metric tons, an increase of 700,000 mt from their previous estimate. ABIOVE held its soybean export forecast for the year steady from last month at 97.8 mmt, as it did on crush with 54.5 mmt. The current USDA projection on the Brazil soybean crop is an even 153 mmt.

The analytical group Safras has released their 2024/25 Brazilian corn and soybean production forecasts. For soybeans, Safras is expecting a crop of 171.54 mmt, well above this year’s estimated crop of 151.55 mmt. This increase is from a 1.9 percent increase in soybean plantings. The 2024/25 corn crop is projected at 134.92 mmt compared to Safras’ estimate on this year’s crop of 125.56 mmt. A return to normal growing conditions during the safrinha season is expected to boost Brazil’s corn production.

The recent drop in returns on U.S. corn production may impact yields this year as much as anything else. Since mid-May, the average return on corn has declined $170 per acre. It is not uncommon to see farmers cut back on inputs when this happens, mainly ongoing fertilizer applications. There is little doubt that this will lower corn yields, especially in years such as this where excessive moisture has caused faster depletion of what fertilizer has already been applied.

It is not out of the question that this decline in corn returns may impact next year’s acreage as well if they continue.

Questions are arising over future consumer red meat demand. While current red meat consumption remains high, there are thoughts this will decline through the end of summer, especially if we do not see a reduction in U.S. interest rates. Consumers cannot afford both high-priced red meat and elevated interest rates at the same time, and they can only control one of these factors. The first cut to consumer spending will be higher-valued beef, which is why that market has corrected the most.

Chins has released its 2nd quarter pork production data that showed a decline in output from a year ago. From March through May, China produced 13.98 mmt of pork, a 3 percent decline from the same period last year. This decline comes as hog culling in the country slows. Hog slaughter in the first half of 2024 totaled 693.95 million head, 3.1 percent fewer than in the start of 2023. China has more culling to reach its desired hog herd size though, especially in the sow count.

The International Monetary Fund has revised its world economic growth forecasts. The IMF believes the 2024 global economy will expand by 3.2 percent. U.S. economic growth this year is now projected at 2.6 percent, just under the previous forecast for 2.7 percent growth. China’s 2024 economic expansion is predicted at 5 percent, up from the last estimate for 4.6 percent. Global economic growth for 2025 is predicted at 3.3 percent. The IMF warns that any increased use of tariffs in global trade will likely push inflation higher and slow these growth rates.

The threat of additional U.S. tariffs is becoming more of a market topic. This is especially the case with China, which is where current tariffs and likely most future ones would be placed given recent trade disputes. When the trade war with China started in 2019, U.S. soybean futures dropped below $8. While that great of a loss is not forecast now, the threat of a further reduction to China trade has weighed on futures.

At the same time, China has already cut its U.S. commodity imports to minimal levels, especially on soybeans.

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