As the USDA begins reporting harvest progress, Brazilian agencies are doing the same for soybean planting. Starting with the US, corn harvest progress is well within average for this time of year. The same is true for soybeans, although only one data point has been released so far.
Above-normal rainfall is forecast for the western Corn Belt, but not enough to cause much concern regarding the pace. At the same time, this rain pattern is extending further south than in previous iterations of the models. This could benefit Mississippi River levels, although the surpluses are not huge at the moment.
Low Mississippi levels are bearish for CBOT futures while supporting Gulf premiums as they keep more product in the Midwest but decrease supply at the port. If we add the pace of harvest, this combination will likely keep shorter futures contracts on the CBOT under pressure. The curve in carry it already shows that.
Corn and soybean planting in Brazil
In Brazil, the planting of summer corn and soybeans has already begun. It was an early start and may be related to producers pressuring state governments to shorten the health gap in order to avoid delays – especially those who have cotton as a second crop, as it is more expensive and sensitive than corn.
Still, there are concerns about the pace of planting in the future. In recent years, delays in soybean planting have led to production reductions in both soybeans and winter corn, although the latter is generally more calendar sensitive.
These fears are mainly related to the drought that has occurred in most of Brazil and which forecasts continue to project. On the other side of the argument, soil moisture is not bad in most of the country, although there are areas of concern.
These include southern Goiás, Minas Gerais and MATOPIBA, but the latter plants later in the year, so there is time for improvement (or worsening). For now, it looks like good soil moisture will allow for a good pace, but we need to watch how dry spots evolve as rainfall continues below normal levels.
In summary, the harvest in the United States is progressing well, but forecasts of above-normal rainfall may be cause for concern. Mississippi River levels could benefit from this rain pattern. In Brazil, planting has already started early, but the drought raises concerns, especially in regions such as the south of Goiás, Minas Gerais and MATOPIBA. Monitoring soil moisture will be crucial for future developments in these key regions.
Source: Pedro Schicchi, Grains and Oilseeds analyst at hEDGEpoint Global Markets | Notícias Agrícolas
