High input costs have been a major topic of discussion lately, but these are not just an issue in the United States. Brazilian farmers are already showing concern over their input availability for the 2022/23 year given current logistic issues. Brazil imports the majority of its farming inputs, including fertilizer and crop protection needs. While several months away, farmers in Brazil are already afraid that they will fall short of needs given global tightness in these products, and production will be affected.

Input costs are not the only elevated cost U.S. farmers are currently facing. Energy costs remain higher than average, which will add to new crop expenses. Other costs are on the rise as well, with land being a primary one. Land values in the heart of the Corn Belt are up 18 percent from last year. We are also seeing elevated used equipment costs as new equipment becomes harder to obtain. Many farmers have been forced to adjust their cost of production higher from these expenses and are now concerned with future profitability.

The U.S. Census Bureau has released its official export numbers for the month of October. Census put U.S. corn exports at 150 million bu (mbu), up 50 mbu from September and 3.7 percent more than October 2020. Soybean exports came in at 386 mbu, well above the 80 mbu from September, but down 9.7 percent on the year. Wheat exports were reported at 45 mbu compared to 85 mbu last month and 64 mbu last year.

Beef and pork exports for October were also mixed. Beef shipments totaled 281 million pounds, down 8 million pounds from September, but 8.9 percent greater than last October. Pork exports totaled 541 million pounds, and while up 31 million pounds from September, were down 8.4 percent on the year.

While the Census Bureau was releasing its export figures, China was releasing import data. For the month of November, China imported 8.57 million metric tons (mmt) of soybeans. This compares to 5.1 mmt in October and 9.6 mmt in November 2020. Calendar year-to-date Chinese soybean imports total 87.65 mmt, down 5.5 percent from last year’s pace.

Trade is more interested in where China’s soybeans are being sourced from. U.S. soybean sales to China have declined on the year by 9.3 mmt. The initial reaction to this is that China is buying more soybeans from Brazil. While this is accurate, China is taking fewer Brazilian soybeans as well. At the present time, China has 58 mmt of soybean imports from Brazil, 4 percent fewer than last year as the country continues to rebuild and streamline its livestock industry.

More attention is starting to be placed on U.S. soy meal demand. Global demand is starting to rise as we see elevated livestock production take place. Smaller oilseed crops in countries such as Canada is also elevating demand for U.S. meal. One of the greatest increases to meal demand may come later in the marketing year if Argentina produces a crop as small as predicted. Argentina is the world’s leading supplier of soy products and a decrease in the country’s soybean crop will reduce these stocks as well.

Not only may acres impact Argentine production this year, but so could the lingering La Nina weather event. A La Nina has been in place for the past year, and after devastating South American production, its impact faded. There are now models that indicate it will strengthen and trim this year’s South American crops as well. At the present time, forecasters believe there is a 90 percent chance of La Nina lasting through winter and a 50 percent chance it will last until next May. If correct, this could impact this coming year’s U.S. production as well.

The U.S. share of the global soybean trade continues to shrink. The U.S. share of global soybean trade in the 2020/21 marketing year was 37.4 percent. Given recent supply and demand changes, this number is now forecast to be 32.4 percent for the 2021/22 marketing year. Record soybean production in Brazil is expected to continue to whittle away at U.S. soybean trade for the next several years. This lower demand forecast is limiting trade response to a potentially smaller U.S. crop.

The United States is going to see an increase in competition from South America in the global corn market this coming year as well, but not for several months. Corn production in Brazil and Argentina is forecast at a combined 171 mmt this year, a large 26 percent increase from last year. This corn will not be available until late summer though, leaving a wide window for the United States to see a rebound in demand.

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