We have seen a shift in attitude surrounding U.S. soybean exports this year. For the majority of the marketing year, soybean loadings have trailed the amount needed to reach yearly projected totals.

We have now seen soybean loadings spike and, if the current pace continues, we could actually surpass our initial projection. This may not have much of an impact on soybean values, though, as high loadings are already priced into the market.

One of the biggest factors in both current and future soybean demand is China. Processing margins in China are negative on soybeans, as are feeding margins. China also has a growing supply of distillers grains to work through as its ethanol production increases, which will offset meal demand. China may even opt for distillers grain imports if needed, as these are currently more economical than soy meal.

U.S. corn loadings have increased considerably in recent weeks, as well. These have trailed initial estimates all year and, while still behind, are giving trade the indication we could meet and possibly surpass projections. As with soybeans, this depends heavily upon whether we can maintain our current loading pace. If we do, corn shipments could top current expectations by 80 million bushels.

There is a difference in opinion when it comes to U.S. export loadings, however; the recent surge in demand we have seen is giving trade the indication the United States may meet and possibly even surpass our yearly sales projections.

While this remains possible, recent sales cancelations have lowered our total sales estimates, mainly on soybeans. That said, it’s possible we could ship all sales on the books, yet have a total that is smaller than initially projected.

A greater concern with exports is recent trade developments, mainly the trade war taking place between China and the United States. Both countries have stated in recent weeks that they will be imposing tariffs on each other. The volume of tariffs and what they will be placed on continues to grow.

Even if actual tariffs are less than publicized, the thought they could take place has devastated market values. Until this mindset changes, it will be difficult to find enough buying interest to post a recovery in the market.

The U.S. continues to hold an advantage over other soybean suppliers into China in future months, which may be an advantage even if tariffs are implemented. For August the U.S. is 20 cents more favorable from the Pacific Northwest to China. For September, the spread widens to a 40-cent advantage.

This should help the United States secure at least some late-summer soybean sales.

There are developments in Brazil that could have long-lasting implications for the global soy complex. Recent currency valuations have caused soybeans in Brazil to rally to record high values. As a result, farmers in Brazil will be able to cover input costs by selling 15-20 percent fewer soybeans this year than in most years.

As a result, not only could farmers in Brazil expand acres, but also have more soybeans to sell throughout the marketing year.

Trade is keeping a close eye on global wheat production. This is not necessarily from total bushels, but rather from wheat quality. There are thoughts that adverse weather will cause low-quality wheat around the world this year and generate more feed grain competition for corn.

At the present time it appears as though 200 million bushels of corn demand could be offset by the use of low-quality wheat in feed rations.

There is a change starting to take place in China’s strict non-GMO policies. Chinese officials have indicated they are considering the relaxation of their policy that strictly limits what commodities can be imported. Not only could this benefit soybean trade between the U.S. and China, but possibly corn as well.

There is also a possibility that a relaxed GMO stance by China will open the door for more production in that country. Thoughts are that an acceptance in GMO corn production in China will immediately increase production by 10 percent. This would add 23 million metric tons to China’s corn output.

If China would plant all GMO seeds on its corn acres, it would add up to 90 million metric tons of production, and potentially turn the country into a corn exporter.

U.S. acreage is becoming more of a market topic. This is not just for corn or soybeans, but for crops such as cotton. We are seeing cotton planted as far north as Kansas this year, and a total acreage expansion over last year of 7 percent.

There is little doubt this could catch trade by surprise in the June acreage revisions report. Trade is also questioning how much double-cropping on wheat acres will take place this year, given the volatile soybean market and questionable weather.

Karl Setzer is a commodity trading advisor/market analyst at MaxYield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.maxyieldcooperative.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources are believed to be accurate.