The quality of the grain coming out of Ukraine is starting to become more of a market topic. There have been concerns over how the grain in storage in Ukraine was being managed ever since the start of the war between them and Russia. Not only has this caused damage to grain storage facilities but it has also reduced staff at grain terminals who can monitor inventory.

The low quality of Ukraine grain is one of the reasons EU members have been pushing back on their imports. The agreement that has been reached will prevent this from happening as the grain containers move through countries such as Poland. A question in the market now is how much of the inventory Ukraine is reporting to be holding is even usable.

The Census export data for March has been released. Census showed 193.8 mbu of corn exports for March, up 50 percent from February but down 34 percent from March 2022. Census is showing a total of 873.7 mbu of exports for the year, roughly 111 mbu more than weekly USDA reports indicate. Soybean exports for March totaled 115.2 mbu according to Census data to put the yearly total at 1.725 bbu. This is 55 mbu above the current USDA total. Census put March wheat exports at an even 50 mbu, down 18.7 percent from February.

Census also released its beef and pork exports for March. Beef exports in the month totaled 285.7 million pounds, up 14 percent from February but down 6 percent on the year. Cumulative beef exports now stand at 779 million pounds for the first three months of the year, a decline of 8 percent from 2022. Pork exports came in at 608.1 million pounds for March, up 20.6 percent from February and 11.8 percent higher than last March. Year to date pork exports total 1.668 billion pounds, a yearly increase of 8.3 percent.

In recent weeks we have seen several changes in U.S. export demand, mainly from previous corn sales being cancelled and U.S. making soybean import purchases. The corn cancellations were from China, which is not that surprising. China does tend to double book a lot of its commodities at certain times of the year to assure delivery. Given the elevated corn offers out of South America at a discount to the U.S., China has opted to wash out of previous U.S. bookings. Argentina is currently making sizable exports, even with a small crop. This will hold buyers over until the Safrinha crop is ready in Brazil. This leaves very little room for additional US corn sales this marketing year.

The most interest in U.S. trade has been on soybeans, where the U.S. is making imports from Brazil. So far, this volume has been minimal, but the price spread could easily lead to more. Brazil is currently offering soybeans at a $2 per bushel discount to the U.S., which is attracting nearly all import buyers. Brazil is also pushing out soybeans to make room for its upcoming Safrinha crop. The unknown now is if China will wash out of U.S. soybean bookings, same as it did on corn. China currently has 75 million bu of unshipped soybean purchases on the books. If even a small amount of these are canceled, it will have a noticeable impact on balance sheets.

Data from the United Nations shows world food values firmed in the month of April. For the first time in a year, global food costs increased, albeit by a minimal 0.6 percent. This was the result of a 17.6 percent spike in sugar values, along with meat values increasing 1.4 percent. Elevated Asian demand for pork and poultry led the meats higher. Vegetable oil costs decreased 1.3 percent during the month to temper gains. World food costs are still down 19.7 percent from a year ago.

Trade has been showing concern over the recent slowdown in U.S. export sales and now this same worry is being voiced over new crop sales. At the present time, the U.S. has export sales on the books of 100.1 million bu for corn, just 49 percent of last year’s sales at this time. New crop soybean sales total just 67.5 mbu, well below the 414.7 mbu from last year. In the past 10 years there have only been two years with lower new crop commitments at this time, those being 2019 and 2020. New crop wheat bookings total just 47.5 mbu.

There is plenty of time for these volumes to pick up, but the longer it takes, the more likely we see overall demand projections adjusted. This is especially the case with forecasts for elevated global production to give buyers more choices to source from.

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