Trade is paying close attention to Ukraine corn exports given the conflict in the Black Sea. Ukraine corn exports for the marketing year are expected to reach 32 million metric tons (mmt). To date, the country has exported 19 mmt, leaving 13 mmt to be shipped out between now and August. There are thoughts that given the issues between Ukraine and Russia these shipments may be delayed or canceled altogether. The question is if this will bring the United States additional export business, or if importers will wait to see if South American corn can be shipped in a timely manner this summer.

The war taking place in Ukraine may have other impacts for the global market as well. It is already reported that considerable damage has taken place to Ukraine’s infrastructure, and it may take months to repair. In addition, mines have been placed in Ukraine ports to prevent naval ships from coming in, which will also take time to remove once the military action ends. Not only are these issues for grain exports, but for moving inputs as well. It is not out of the question these developments could impact Ukraine’s spring plantings, especially on corn. These events may further reduce Russian fertilizer exports as well.

Soybean harvest is progressing in Brazil, and as it does, we continue to receive updated crop estimates. While many of these have shown reductions from initial crop projections, a few have started to creep higher. More crop estimates are coming in around 130 million metric tons (mmt), and while this is under the current USDA projection, it is higher than some of the recent predictions. The general consensus is Brazil’s soybean crop will be less than 130 mmt. These reports are giving the indication we could see a bearish move in production as harvest progresses.

One major benefit for the Brazilian soybean crop this year has been a lack of Asian Rust Fungus cases. So far only 71 cases of ARF have been reported. This compares to 119 last year at this time and the five-year average of 192 cases in early February. Better crop scouting and farming practices are reducing outbreaks, as are the dry soil conditions over the past two years.

We are also seeing updates to Brazil’s corn production. Some firms claim the Brazilian corn crop will be around 113 mmt but others believe it will be no less than 118 mmt. This difference is the result of improved weather conditions in recent weeks and the rains that have started to fall on newly seeded fields. Thoughts that double cropping on corn will be higher than initially suspected are also leading to the larger crop estimate. If accurate, this would increase Brazil’s corn production 30 mmt from last year and elevate the Brazilian share of the global corn market.

The most interest in Brazil right now is on the country’s soybean exports. Exports are starting to build, but farmers selling has been very limited in recent weeks. This is not as much from crop estimates as it is from currency valuations. The Brazilian Real has declined 15 percent in value since mid-December. Even with the rally we have seen to soybean values, this drop means many farmers in Brazil would be receiving less revenue for their sales than last year. Until the Real corrects versus the U.S. dollar, farmer selling of any commodity in Brazil will likely be limited.

Even with the Brazilian soybean harvest advancing, sales of new crop soybeans are minimal. This is generating ideas that yields are down, and the crop will not be as large as estimates indicate. While this may be part of the reason, another is currency values. The Brazilian Real has been appreciating in value versus the U.S. dollar, which lowers what a farmer receives for his products. Brazilian farmers are also reporting adequate cash flow from previous sales and not interested in extending coverage.

Trade continues to monitor our export sales totals and has questions on yearly expectations. According to the latest Census data, yearly export loadings on soybeans currently total 1.15 billion bu. While this is the second largest volume on record, it is down 22 percent from last year. This is mainly from a loss of Chinese business where shipments are down 92 million bu (mbu). While other buyers have stepped up with elevated purchases, they do not equal the loss of Chinese demand.

The same demand is being monitored on corn. Census placed marketing year corn exports at 630 mbu, only 3 mbu under last year. The USDA is forecasting a yearly decline of 328 mbu on corn exports as they see demand dropping once the South American crop becomes available. This is mainly from the large crop that is expected out of Brazil this year.

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