Good morning friends!

Sorry for the slight delay in getting the pod out this morning, I plan on waiting until 7:30 on Thursdays so I can give you an update on export sales.  Besides, there isn’t much else to talk about regarding the US markets.

The wheat and corn markets look like they are trading an L shaped bottom with substantial demand coming in on breaks to support the lows.  Without any major supply story (there really wont be a supply story until the market shifts focus to SAM growing) the markets probably look to short cover and then sell off as farmers unload grain.  I remain bullish corn and wheat over the long run, neutral to bearish soybeans over the medium term (bullish on breaks) and bearish cotton in the short run.

Dr. Cordonnier, a South American crop analyst has come out with projected production levels for corn and soybeans. Here is what the good doctor said to Pro Farmer:

South American crop consultant Dr. Michael Cordonnier’s early crop pegs reflect expectations for the region to grow 25% more corn in 2016-17 compared to year-ago and for soybean production to rise by 4.7%. He currently projects corn acreage in Brazil to rise by 4% and to rise by 25% in Argentina. Meanwhile, he expects soybean acreage in Brazil to rise by 1.5% and decline by 3% in Argentina.

Cordonnier says there are several reasons for a slowed pace of expansion of soybean acres in Brazil, including, “More emphasis on full-season corn in southern Brazil, lower domestic soybean prices relative to corn, lower international prices for soybeans, farmers are less capitalized due to poor crops in 2015-16, higher costs of production, tight credit policies in Brazil, higher interest rates, higher inflation and a struggling Brazilian economy.”

In Argentina, corn acreage expansion is largely due to the elimination of the corn export tax and the country’s hesitation to followthrough with a promise to reduce the soybean export tax from 35% to 30%. He also notes the government’s promise not to interfere in the corn export market, a devaluation of the country’s peso making its corn exports more competitive and a desire for a more balanced rotation between corn and soybeans.

Dr. Cordonnier 2016-17 Soybean Estimates

Est.

Maximum

Minimum

2015-16

in million metric tons

Brazil

100.0

103.0

96.0

95.5

Argentina

58.0

60.0

56.0

56.0

Paraguay

9.1

10.0

8.5

9.0

Bolivia

3.1

3.5

2.7

3.0

Uruguay

3.0

3.5

2.7

2.0

Total

173.2

180.0

165.9

165.5

 

Dr. Cordonnier 2016-17

Corn Estimates

Est.

Maximum

Minimum

2015-16

in million metric tons

Brazil

82.0

88.0

78.0

66.0

Argentina

35.0

32.0

38.0

27.0

Paraguay

3.2

4.0

2.7

3.1

Bolivia

0.7

1.0

0.6

0.7

Uruguay

0.4

0.6

0.3

0.4

Total

121.3

125.6

119.6

97.2

Cordonnier says around 2% of Brazil’s soybean crop has been planted, just slightly behind the average pace. He says around 30% of Brazil’s full-season corn crop has been planted, which is ahead of the average pace of 19% for this time of year. He says farmers in Argentina took advantage of recent drier conditions to get 15% of anticipated corn acres planted, which compares to 5% on average. Soybean planting in Argentina typically begins in early October.