Brazil producers expected to cut corn acres - Friday, 22 September 2017

News that is gathering some attention:

  • With current prices vs input costs soybeans return $120/acre over corn.
  • Corn harvested on dryland in Nebraska has been breaking yield records with averages between 180-200 bushels per acre.
  • China harvest to begin in 2 weeks.
  • Brazil exports 105% of last year.
  • Funds are short 121,000 corn contracts but are even on soybeans.
  • Soybean exports have been increasing.
  • Brazil sees heat continue but rain is in forecast.
  • Reports shows overall higher soybean yields than expected.
  • High probability of La Niña developing this year which brings concern especially for areas that are already dry.
  • No immediate threat is in the forecast but the trade is continuing to monitor any talk of frost particularly in regions where crop maturity has been slow.

Kevin Van Trump of the Van Trump Report included a field report from a producer in Illinois located between Decatur and Champaign, IL.

“Kevin, we are late getting harvest going but have already taken out a few plots and some producers have gotten into both corn and soybeans. They seem to be amazed at early indications of yields. Most thought they would be down 15-20 percent as we have been in a dry area all summer. Soybeans are banging in at 70 to 80 bpa and corn 220 to 250 of what has been taken out.”

Van Trump concluded that if he were to generalize the numerous field reports he has been receiving each day, “I would say things are better in the fields than many were forecasting from the sideline.”

AgroSouth News reports that farmers in Brazil are expected to make large reductions to corn acres.  Private consultancies have estimated that Brazil could see a 20% to 30% reduction from previous surface planted to corn.  Paulo Bertolini, director of the Brazilian Association of Corn Growers, is predicting that this number may actually be closer to a 50% reduction.  Carlos Dellavalle, an agronomist in Lagoa Vermelha an area Northeast of Rio Grande do Sul, believes that the reduction in corn surface this season may even reach 60% or higher.  “Nobody is talking about corn here.  All we talk is about soybeans.  The inputs market is very slow.  I can say that here (Rio Grande Do Sul) the surface would reduce 70%.” The map below shows the rainfall totals for the past 30 days.  The major crop growing regions of the country have seen very little precipitation, Mato Grosso needs rain to begin soybean planting but dry weather is expected to prevail for the next several days.

The USDA announced the 6th largest one-day soybean sale ever this week.  1.08 MMT’s were purchased to an “unknown” destination, most traders suspect the buyer to be China.  The global demand for soybeans appears to remain strong and is increasing. Brazil’s government announced they are raising their biodiesel mandate from 8% to 10% and there are also signs that crush demand is growing in Brazil as well.  The graphic below is from the Van Trump Report, it shows the amazing expansion of soybean acres in the U.S. but notice the explosive growth of soybean acres in Brazil.

 

There are some forecasters that are looking for the development of heavy rains that could become extreme for the northwestern portion of the U.S. Corn Belt.  If there is any further information on this in the next week I will pass it along. August has been named the 9th coolest in the Midwest in 123 years according to the National Oceanic and Atmospheric Administration. This trend may continue into the winter and reach from the Northwest to the Midwest. The Climate Prediction Center has released its ENSO outlook which shows a 55% to 60% chance of La Niña developing during this fall and winter in the northern hemisphere. Brad Rippey, a meteorologist at the USDA says, “In addition to the potential for a cold winter across the Plains and Corn Belt, there could be stormy, snowy weather.  In the southern tier of states, a warm dry winter could appear.

We have been experiencing summer like temps over the past couple of weeks but this trend is changing as we move closer to October.  The map below shows the temperature departure from normal for September 27th through October 4th.

 

CROP PROGRESS

 

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