We are starting to see more adjustments made to private estimates on this year’s potential corn yield. Given recent weather across much of the United States, private analysts are now projecting a corn yield from 175 to 177 bushels per acre. This compares to the USDA estimate of 179.5 bushels per acre being used in balance sheets. The USDA may wait to see what July weather conditions are before adjusting their forecast, or at least until pollination is complete. Given projected demand, any corn yield less than 175 bushels per acre this year and additional rationing will likely be needed.

We are seeing less interest in changing U.S. soybean balance sheets, which is not surprising as weather is just becoming a factor for that crop. The fact remains there is very little room for any decrease in the U.S. soybean yield. The current U.S. soybean yield is projected at 50.8 bushels per acre. If yield declines by just one bushel per acre it will cut new crop ending stocks nearly in half. The threat of this will keep an elevated amount of risk premium in the market through the growing season.

Consumer spending wcontinues to be closely monitored by trade, especially in the livestock sector. Disposable per capita income in the United States is actually up 1 percent from last year. At the same time retail beef values are down 8 percent as U.S. stocks have rebuilt following logistic issues caused by the COVID outbreak. While this is positive, trade is becoming more concerned with rising ethanol stocks, especially if consumer spending turns down and travel declines.

Even if domestic beef demand slides in the near future, exports appear more than able to make up for it. At the present time, U.S. beef exports total 985 million pounds, a 22 percent increase from last year. Outstanding beef sales for export are up 44 percent on the year as well. Of the total U.S. beef sales, 16 percent are to China, well above the 2 percent market share a year agwo.

Trade is closely monitoring the Chinese import program on all commodities. Reports of port congestion and lengthy unload times are starting to surface. This has already led to some Chinese feed grain purchases being canceled, mainly barley. The United States has a relatively small amount of unshipped old crop sales to China, so cancellations are unlikely to affect current balance sheets.

The United States has had considerable competition in the global soy meal market from Argentina. Argentina exported a record 2.87 million metric tons (mmt) of meal in April, and after a slight dip in May, set another record in June with 2.9 mmt. Given the rate of Argentine meal exports the country will likely be out of product by August given its soybean crop size. If correct this will open the door for additional U.S. export trade.

kraine officials have announced they will not be placing restrictions on corn nor wheat exports for at least the next two months. Last year, Ukraine officials limited exports to 17.5 mmt on wheat and 24 mmt for corn due to drought losses. This year’s combined crops are expected to total 76 mmt, well above last year’s crops. The fact Ukraine didn’t come close to the limitations that were set a year ago are also lessening worries over this year’s loadings.

The USDA attaché in Brazil continues to raise its Brazilian soybean production estimate, and now has it at 137 million metric tons (mmt). More interest is being placed on the 2021/22 crop though where the attaché is projecting a considerable increase in soybean production. Between elevated plantings and a return to more normal growing conditions it is thought Brazil will produce a soybean crop between 143 and 144 mmt of soybeans.

The attaché is also predicting higher Brazilian soybean exports for the upcoming marketing year. Brazil’s soybean exports this coming year are expected to reach a record 94 mmt, up from this year’s 87 mmt of exports. While these exports are several months away, they are easing concerns in the global market over the ongoing tight soybean situation in the United States. It is not out of the question this increase in Brazilian production could allow for elevated U.S. imports if needed.

Even though harvest is still several weeks away we are starting to see more market preparations for it to get underway. A topic that is starting to gain attention is storage availability. The volume of grain and soybeans in storage is considerably less than a year ago which will allow for more to be held at harvest. This is especially the case with on farm facilities. As a result, we may not see the basis weakness this fall that typically comes with harvest activity.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named.  This is not independent research and is provided as a service.  As such, this is considered a solicitation.