Update for January 11, 2022
Tomorrow at 11:00 CST the USDA will announce the monthly WASDE and Crop Production reports as well as the quarterly Grain Stocks and a few others. There are a lot of question marks regarding SAM yields and this is likely to continue for some time as Brazil plants their largest corn crop during the second season and has yet to be planted. But the current corn crop is suffering and because of that Dr. Cordonnier has cut his estimated corn production for the entire crop down by 1 million tons. And has also made further cuts to his SAM soybean estimates, reducing Brazil by 3 million tons and Argentina by 2 million tons. CONAB announced their latest estimates today and while they lowered their expected yields they did not reduce them as far as many analysts had anticipated. So now we are left to wonder what the USDA will do. Will they reduce the SAM yields down to a conservative “wait and see” type of number or will we see a more sizable adjustment? Keep in mind too that the trade has already factored in a portion of the SAM weather concerns into our current prices and U.S. soybeans are more costly than beans sourced out of Brazil when you factor in transportation costs.
Trade estimates for the tomorrows USDA reports along with figures from last year’s report are included on the pre-report worksheet shown below.
January soybean exports out of Brazil may reach a new record. Last week shipments out of the country totaled 518,000 tons. According to U.S. export reports U.S. soybeans fell to their lowest level last week since the Gulf ports reopened following damage from Hurricane Ida. This has traders concerned that our biggest soybean customer, China, may be sourcing all of their export needs from SAM through the near future. The other issue traders are monitoring is the zero-Covid lockdowns that are occurring in China. Will they use as much as they had estimated considering 2 major cities-Tianjin with 14 million residents and Anyang with 5.5 million residents have restricted travel both into and out of the cities and the Chinese governments has begun mass testing. The Chinese government has also begun to shut down some of the crush plants as the margins are negative. It’s hard to know exactly what all of this could mean in regards to agriculture exports to China.
Weather patterns across SAM may be changing if the extended outlooks prove to be correct. In the meantime, though extremely, hot temps are forecast for Brazil and Argentina this week with highs expected to hit above 100 degrees in most areas. Rainfall in the northern portion of Brazil has been plentiful and in many cases too much rain has been received and flooding has occurred as a result. It has also slowed harvest progress with only 0.6% of the soybean crop from Mato Grosso harvested compared to 1.8% at this time a year ago.
The U.S. precipitation estimates through next Tuesday are shown in the map below.
The longer range 6-to-10-day forecasts are included below as well.