Nearly all interest in the market right now is on the start of the U.S. corn and soybean harvest. Despite current discrepancies in yield potential, this will still add bushels to an already adequately supplied cash market. As a result, we are starting to see seasonal basis pressure build. The question now is how long this basis pressure will last. Many producers across the U.S. are indicating they will only sell what is absolutely needed this fall and may opt to pay for commercial storage rather than sell into a depressed market. If this is followed through on, it will limit our fall basis pressure, especially if yields start to fall.

Trade is also going to be closely monitoring this fall’s post-harvest tillage reports. Current outlooks indicate we could see quite favorable harvest weather, and this tends to allow for more fall applied fertilizer. Historically this leads to more corn acres. Producers have stated they may trim their corn plantings next spring given current production costs and projected returns. This would put pressure on soybeans.

The Brazilian firm CONAB has released its initial projections for the 2024/25 crop sizes in that country. CONAB is predicting a Brazil soybean crop of 166.28 million metric tons, a 12.8 percent increase from the 2023/24 crop year. 

Brazil’s 24/25 corn crop is projected at 119.8 mmt, up slightly from this year. Corn exports are expected to decline 5.6 percent though as domestic corn demand in Brazil rises. The most notable is in ethanol manufacturing where a 17.3 percent increase in production is forecast.

Brazilian farmers are also expected to plant 3.2 percent more cotton this year due to elevated returns. CONAB believes Brazil will produce a total of 326.7 mmt of grains and oilseeds, a record high volume. 

CONAB has also released its initial 2025 beef production estimates. CONAB believes Brazil will produce just over 10 million metric tons of beef in 2024. Beef production in 2025 is expected to decrease 4.3 percent due to a declining cattle inventory, but exports will still increase by 2.5 percent. Brazil is the world’s leading beef exporter. The U.S. is the world’s leading beef producer, but much of this is consumed domestically. The U.S.’s beef export projection for 2025 is currently projected at 2.6 billion pounds.

One of the primary factors for recent trade has been negative economic news out of China. China’s August industrial production grew 5.4 percent, the weakest increase since last March. This was also the fourth consecutive month of declines in production. This was followed by data showing retail sales in China grew 2.1 percent in August, the 2nd slowest rate in the past year. Restaurant sales in China increased 3.3 percent in August, the 2nd slowest growth rate since January 2023. This slow growth comes despite lower consumer costs and confirms the country’s state of deflation.

Chinese officials also reported a sow inventory of 40.41 million head at the end of July. This was a 5.4 percent decline from last year following massive culling due to African swine fever and a streamlining of the country’s hog industry. This lower sow number will likely lead to a decrease in feed demand as the country becomes more efficient with its livestock production on top of a smaller hog herd overall.

Low water is again impacting the U.S. river system, and the U.S. export market. Most U.S. rivers are seeing draft restrictions due to low water and now the Coast Guard is reporting several groundings on the lower Mississippi River. Barge freight has already doubled in the past month and will continue to work higher, impacting basis as it does. This is the 3rd year of shipping issues on the Mississippi River, and some importers are starting to show concern. 

Low water has also been a factor for South American exports recently. Water levels on the Amazon and Parana Rivers have both fallen to record low levels in recent weeks. Same as in the U.S., barges then need to be loaded with less product, which in turn limits how much grain is being delivered to export terminals. This has pushed load times for vessels out to fifteen days which is a point where importers start looking elsewhere for needs. This has greatly favored U.S. exports, especially with our offers the most attractive in the global market.

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