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Update for March 17th 2023

3 Growing Seasons in Brazil, 4 Orders in 4 Days & A Short Warm-up

Corn has sustained a $0.30 rally from the lows of a week ago. Three corn sales to China this week now total near 75 million bushels have contributed greatly to this as well as easing some of the concern regarding the U.S./China relationship. ADD TO THAT ANOTHER SALE THIS MORNING OF 7.5 MILLION BUSHELS. BRINGING THE TOTAL UP TO 4 CORN SALES THIS WEEK TOTALING OVER 80 MILLION BUSHELS! There is some optimism in the market now that the USDA will not need to further lower export estimates in upcoming reports.

U.S. soybean weekly export sales were also stronger-than-expected however, export prices out of Brazil are considerably lower and the new crop bean harvest is almost 50% complete so supplies are bountiful. There are rumors that Argentine soy crushers have purchased a few cargo loads of new crop Brazilian soybeans and that there may also be some heading to the U.S. due to the recent price break.

55-60% of Argentina’s corn crop is rated Poor/Very Poor so it’s not surprising that several sources have once again lowered their crop estimates, several are now under 38 MMT compared to the USDA’s projection of 41 MMT. Argentina is the top global exporter of soymeal and soybean oil but according to The Grains Processing Chamber, soy crushing plants are now being forced to operate at their lowest capacity in history. Gustavo Idigoras, head of the CIARA oilseed and grain processing chamber says that the industry is facing a “crisis” now as industrial idleness is approaching 70% due to inventory, the worst ever that is not a result of protests. A consortium of Argentine agricultural companies said today that this season’s severe drought and mid-summer frosts could cost the country more than $20 billion consisting of losses of 38% from the soybean sector and 30% from corn. (Reuters)

Wet and cool conditions continue to dominate in parts of Brazil. The latest estimates indicate that around half of the 1st-season corn crop has been harvested and over 80% of the 2nd-season corn crop is now planted. With the ever-increasing acreage in Brazil the nation is moving towards becoming the world’s largest supplier of corn and dethroning the U.S. (The USDA’s Economic Research Service estimates that Brazil could add 49 million more acres of cropland into production by 2031) Despite the ongoing rainy weather which has delayed the planting of the 2nd-season Safrinha crop in southern areas, most analysts still expect a massive crop. When the ideal planting window closes before planting is completed the crop faces increased risks from adverse weather during the dry season. However, record yields in the top production state of Mato Grosso are expected to offset most of the projected yield losses. (USDA. Conab, Reuters)

Brazil’s unusual three-crop growing cycle can be confusing. Here’s a brief explanation of each season:

• The First-season corn is also often referred to as “summer corn”. It is grown primarily in southern regions of Brazil but some northeastern states also grow it as well. It has a lengthy production window that runs from August through December and is harvested between January and June. The summer-corn accounts for roughly 21% of all of the yearly corn production in the country.

• The second-season corn crop, commonly referred to as the “Safrinha” corn is planted sometime between December and March, following the soybean harvest. The USDA estimates that 77% of the total 2022/2023 corn crop will be grown during this 2nd season. The timing of the planting of this crop puts it at risk of running out of moisture before it is fully mature as the second-crop production window runs up to the start of Brazil’s dry season.

• Third-season corn is planted in a limited number of states located in the North and Northeast portion of the country. This season runs along the same schedule as ours in the Midwest with planting occurring around May and harvest in October. This 3rd season accounts for the smallest percentage of total production at around 2% annually.

The ”grain corridor” deal between Ukraine and Russia is set to expire tomorrow. Russia has expressed their willingness to extend the agreement but they only want a 60-day extension, half of the 120-day extension entered into last November. The U.N. and Turkey say that the discussions are ongoing but when asked if a resolution is near they said, “Our position is that it is important that this continues” but there are no significant updates as of yet.

Farmers in some areas of Ukraine have already started planting their 2023 crop but APK Inform reports that producers only have around 35% of the herbicides and pesticides needed for the first half of the year. Denys Marchuk, deputy chair of the Ukrainian Agrarian Council said last week that the agricultural companies that plant most of the countries fields are $1.08 billion short of the money needed to fund early season input expenses. The ministry has not publicized their outlook for the 2023 production total but some sources estimate harvest may decline by 37% this year. (Reuters)

The U.S. drought persists but many areas have experienced significant improvements.

Current areas Experiencing a Drought vs. November 1, 2022

Corn 31% vs. 71% Nov 1

Soybeans 23% vs. 71% Nov 1

Winter Wheat 53% vs. 74% Nov 1

Spring Wheat 49% vs. 79% Nov

Forecasts are improving for the upcoming week. Models are situating the next trough further to the north pushing the colder temps and the snowfall potential further away. This will allow temps to climb into the 50’s in northern Iowa and 70’s in southern areas of the state. The maps below from the EURO and GFS show expected highs for the end of next week.

Dew points are forecast to increase along with the temps. This will generate CAPE up to 1200/j/kg which is a recipe for instability, especially to the south where temps will reach into the high 60’s and low 70’s.

The K index shown in the following map indicates thunderstorm potential, where it reaches into the 30’s is where the best chances exist for storms to develop, as usual timing will be the key. Sadly, temps are forecast to fall once again as we move into the final week of March and snow chances will increase.

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