Weather weighs on markets in coming weeks – AgriNews


MINNEAPOLIS — Shortly after the release of the latest supply and demand estimates on Feb. 9, trade quickly returned to trade weather with a focus on South American corn and soybean production.

According to Advance Trading research analyst Brian Basting, there were few surprises for trade in the US Department of Agriculture’s U.S. and global crop balance sheets, but there were some telling numbers of what could be seen on the inside. ‘horizon.

“China appears to recognize that it will not be able to source soybeans from South America for the 2022-2023 crop year.”

— Brian Basting, Advance Trading Research Analyst

Basting presented his analysis on a conference call hosted by Minneapolis Grain Exchange.

There are reports of dry conditions in South America and its impact on soybean production. What did the USDA numbers indicate?

“The USDA has recognized the harvest issues we are seeing in South America and has reduced the size of the crop in Brazil from 5 million tonnes to 134 million. This number is a bit higher than the average trade estimate, which is 133.5 million tonnes, but that number is still unknown as we enter mid-February.

“Some in the trade say that figure is still a little optimistic at 134 million. We will find out as they move forward with the harvest in the north and as the crops develop in the south. from Brazil.

“Argentina was reduced from 1.5 million tons, to 45 million tons, and Paraguay was reduced from 8.5 million to 6.3 million tons. Between these three countries, there were more 8 million tonnes reduction in South American soybean production.

“It’s going to be a weather market for the next 30 days for soybeans as they come into the critical month for crop development in Argentina in particular. Argentine soybeans are in pods and pods as we speak, and are expected to be hot and dry next week.

“Will that happen or will we start to see a change by the end of February to a cooler, wetter pattern? No one knows, but in the short term it looks warmer and drier . »

The USDA cut China’s soybean imports for the current marketing year from 100 million tonnes to 97 million. What do you see in the future with China and the soybean market?

“The cake of Chinese demand is shrinking. However, the share of this smaller pie is changing as we have seen US exports of 2022-2023 new crop soybeans to China and unknown destinations over the past two weeks were significant amounts.

“China seems to recognize that it won’t be able to source soybeans from South America for the 2022-2023 crop year and that’s a dynamic we’re seeing play out here as we look to the future of the soybeans in Nov. 20 cents today at $14.33.

“This is the highest price on record for soybean futures prices from November to early February. Soybean prices were higher than that later, for example in 2021, but in early February they were never higher for November. »

There was no change in the US corn balance sheet. The carryover was 1.54 billion bushels. Last year it was 1.235 billion. The USDA cut Brazil’s corn crop by 1 million tons.

“It is maize in Brazil that has experienced drought in recent months. However, this safrinha maize, which is double-crop maize planted after the soybean harvest in Brazil, accounts for about 75-80% of Brazil’s maize production.

“Thus, this maize production which has suffered from the drought represents only 20 to 25% of Brazil’s maize harvest. This is a much different scenario than soybeans, where soybeans are currently suffering. This crop of safrinha has just been sown.

“I think we’ll go back to commercial weather for Argentina and Brazil. Also keep an eye on corn exports to see if China would come and buy corn. That would be a wild card to watch, and/or China would cancel corn like it canceled US corn last week.

On wheat and our northern neighbours, the USDA has reduced inventories of all Canadian wheat by 2 million tonnes from last month to 2.14 million tonnes.

“Things are really tough out there in Canada as we approach the last quarter of the crop year. Canadian exports increased by 200,000 tonnes, from 15 million tonnes last month to 15.2 million tonnes this month.

“Last year, Canada exported 26.4 million tonnes, which really reflects the drought that has affected the northern plains of the United States, as well as the Canadian prairies.”

The soft red winter wheat balance sheet remained unchanged. However, what were the telltale signs of the supply and demand estimates for hard red winter wheat?

“There was a reduction of 10 million bushels in the export forecast from 335 million to 325 million bushels, increasing the HRW stock from 340 million to 351 million. We saw a slight drop in home usage.

“The reduction in exports was directly related to slow sales shipments for HRW. The third quarter of the agricultural campaign will end at the end of February, and we see fierce competition around the world for HRW when you look at a record crop that has been harvested in Argentina – 24.5 million tonnes. A record crop was harvested in Australia of 34 million tons.

“The wild card for the harsh red winter, and all the wheat for that matter, would be the continued tension between Russia and Ukraine. If that turned into something that disrupted trade, that would obviously be a wild card to watch. This could potentially shift business to the US, but we haven’t seen that yet.

“The key thing now, as we look at wheat in the latter part of winter, will be the drought affecting the hard red winter crops in Texas. We are already hearing reports from the Texas Panhandle about the acreage possibly being abandoned due to drought and expanding north into Oklahoma and far western Kansas.

“We also need to keep an eye on the recharge capacities in the northern plains after the drought that was recorded there last year. Weather will become increasingly important in the future, not only here in the United States, but we will also monitor weather conditions in the Black Sea region, Russia, Ukraine, Europe and China.


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