Argentina – The USDA once again lowered production estimates for both Argentine corn (down 1 million metric tons) and soybeans (down 500,000 metric tons). In return they lowered Argentine corn exports form 17.0 to 16.0 MMTs. they also lowered Argentine soybean exports from 9.7 MMTs down to 8.0 MMTs. Will the recent rains stop the bleeding or will too much rain do even more damage to the crop? The other question is when will Argentine producers let loose of their remaining old-crop bushels? Will the Argentine government force their hand by threatening to raise export tariffs?
Brazil – Weather in Brazil continues to provide fuel for debate in regard to production. Will extended heat and dry conditions (in some areas) become severe enough to eventually prompt the USDA to start tapering back their Brazilian production estimates? What happens with second-crop corn, how much will be planted and will the weather cooperate? The other question is will Brazilian logistics hold up enough to satisfy Chinese demand? Keep in mind the situation this year seems much different than last year, when Brazil’s supplies were extremely tight and domestic crushers where bidding up aggressively against the exporters for the early beans. This year it seems the early beans are sailing smoothly to the ports without much strong interest from the crushing plants.
China - With the Chinese purchasing more beans form Brazil for March delivery, many industry experts believe “switches” may already be happening. Keep in mind the trade is still deeply concerned about the fact China continues to cancel US corn shipments. Not only is China enjoying another supposed round of record corn production but there is also some question in regard to industrial usage slipping a bit. Lets not forget the ongoing battle with bird-flu is prompting some bears to question the strength of nearby feed demand. If the Chinese government has to continue culling their domestic flock in order to get the bird-flu virus under control corn demand for feed will obviously be reduced.