What's Going On With The Markets? - Thursday, 21 April 2016

The corn and soybean markets have had a nice run higher.  So what’s going on that is causing prices to move higher:

  • Brazil’s government has eliminated the 10% tax on corn imports from non-Mercosur countries for 6 months. 
  • The removal of this tax encourages imports and contributes to the speculation of tight supplies.
  • Weather conditions in South America have not been favorable for crop production. (more details below)
  • The EIA reported that 939,000 barrels were produced last week, only 1,000 barrels more than the previous week. 
  • Ethanol stocks fell last Friday by 300,000 barrels from the previous week which is the lowest supply level since January 22nd.
  • Corn exports remain strong. Private exporters informed the USDA yesterday that 136,000 MT of U.S. corn was sold to an unknown destination for delivery this year and 241,516 MT were also sold to an unknown destination earlier in the week.

The USDA is reporting one of the fastest paces of corn planting to date. This week the USDA reports corn planting is 13% complete compared to 4% last week, the 5-year average for corn planted by this date sits at 8%

The map below shows the percentage of corn planted in each state, red indicates that planting is behind the 5-year average pace and green states are ahead of the 5-year average pace.  A few of the states that saw the largest progress:

  • Iowa and Minnesota both went from 0% planted a week ago to 13% this week.  The 5 yr. average for both states is only 3%.
  • Illinois was 2% planted last week 12% this week, 5 yr. average is 14%.
  • Kansas moved from 17% last week to 35% this week, 5 yr. average is 16%.


There is a lot of speculation regarding the temporary elimination of the 10% import tax in Brazil.  The Brazilian Association of Animal protein has estimated that livestock producers may import up to 1 million tons of corn this year, this is the largest amount of corn imported by Brazil since 2000 and is likely to occur in the first half of the year before the safrinha corn is harvested. 

Talk is that the extreme weather across South America has taken the top-end off  yields and reductions in USDA estimates will realistically need to be made.  Last week rain returned to areas in central Brazil, the Mato Grosso region saw the most benefit while Bahia and Goias stayed mostly dry.  The dry season will be starting soon so additional rainfall is need but forecasts continue to call for above normal temperatures and little moisture throughout the agricultural regions.  Argentina is dealing with the opposite problem where severe flooding has been occurring causing damage to crops. Current forecasts are improving for Argentina with less rain expected which should allow enough time for fields to dry out enough to continue harvest.  

A new 6 to 10 day outlook for April 24th – 28th indicates that the majority of the country should see above normal temperatures accompanied by above normal precipitation.  A new storm system is forming that could bring 1 to 3 inches of rain by Monday, the map shows the estimated rainfall this system is expected to deliver.  



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