Some questions are starting to arise about the quality of the U.S. corn crop being stored. This is mainly in regions that suffered from disease during the growing season, mainly tar spot and southern rust fungus. These cut test weight to below normal levels in several cases. This corn is now starting to make its way into the supply line, and some buyers are showing concern. Low test weight impacts usage and typically requires elevated corn consumption. Low test weight also impacts what a buyer is willing to pay. While this is not a widespread problem at this time, it is enough that corn grading is being closely monitored.

China’s corn crop may have been a record 301.2 million metric tons this year, but a large portion of this crop had such low quality it will not be usable for livestock feed. According to research firm Sitonia, 30 mmt of China’s corn crop may be unusable for feed due to high toxin levels. This news has caused the USDA’s Foreign Ag Service to up its China corn import forecast to 8 mmt from its prior 1 mmt estimate. The FAS office also believes this number may increase. China imported 800,861 mt of corn in December, a 44 percent increase from November.

China has a 2026 sorghum import forecast of 7.6 mmt, but this may be light as well, especially following recent purchases form the U.S. Sorghum is a popular corn replacement grain in China as it requires little import certification compared to corn.

China’s tight corn supply is also being noted in the country’s wheat demand. China’s Sino group has been conducting auctions from government reserves to help lower domestic grain costs. There have been four of these auctions since Jan. 1 with solid demand at each one. Sino has indicated these will continue as needed.

Year to date, China has imported 3.98 mmt of wheat, a 65 percent decline from last year’s imports. China harvested a bumper grain crop this year which has cut into its wheat needs. More analysts are starting to question how much of this crop is usable given low-quality reports.

Brazil soybean harvest is advancing, but its impact on global market has been limited. Domestic soybean processors have expanded operations in recent years and now demand a larger share of the soybean crop. This is starting to impact Brazil’s ability to satisfy both the interior and export markets, especially during the early stages of Brazil’s harvest. In turn Brazil’s soybean values have become more expensive, but what is a bigger concern from importers is timely shipments. This includes the leading trade partner China.

One country building trade relations with China is Canada. China and Canada recently resolved their dispute over electric vehicles and this caused an immediate spike in trade as China booked a reported 10 vessels of Canadian canola. This would total roughly 650,000 mt. While not a huge volume, it is business the U.S. had been hoping for before Brazil got its export program underway.

The Black Sea conflict continues to impact Ukraine’s exports. Ukraine is reporting year-to-date corn exports of 11.8 mmt, well below last year’s 11.8 mmt. Ukraine wheat exports now total 8.4 mmt, also well under last year’s 10.6 mmt. Ukraine has suffered significant port damage in recent months as well as having power disruptions, greatly reducing export volumes. Shipping premiums to enter the Black Sea are also limiting interest in sourcing needs from the region. Ukraine is also seeing pressure from cheaper grain out of Argentina and the United States.

An interesting story is starting to develop in the U.S. replacement cattle market. Livestock producers are holding feeders a bit longer before they are being placed, which is elevating placement weights. At today’s market values, this is making many yearling feeders unprofitable, even with high demand for fat cattle. This has also started to draw more demand to dairy cross feeders as they tend to be lighter at that age.

A story that is again gaining traction in the market is the proposed approval for year around E-15 ethanol usage. E-15 usage has historically been suspended during summer months due to emission concerns at elevated temperatures. For the past several years we have had a temporary lifting of the E-15 blending suspension though to lower energy costs. This has not really increased E-15 demand as usage is not mandated. Until this changes and usage is mandated, elevated consumption will be difficult to sustain.

Crop scouts continue to tout large South American crops, but we are starting to see a lot more doubt on the Argentine estimates, especially on soybeans. The USDA is currently predicting a 48.5 million metric tons. Most analysts are in line with the USDA, but we are starting to see more doubt on production following recent hot, dry conditions. The Argentine soybean crop is now rated 47 percent good/excellent and 16 percent poor/very poor. The soybean crop rating has declined nearly 20 points in the past month, and there is little doubt this has affected yields as well. Argentina’s corn rating is higher, but those numbers are expected to start falling as well.

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