Hot and dry conditions in parts of South America make the size of its corn and bean crop uncertain, experts tell the U.S. Farm Report Market Roundtable. That means any price movements in the market are hard to project.
"I really think that depends on what the USDA writes down," says Dustin Johnson, EHedger. "The private analysts are definitely estimating a much bigger number for Brazilian soybean production than the USDA’s projecting, even more so with corn. The Brazilian government has corn at 77 million metric tons, the USDA only has 70. That extra 7 million metric tons is going to be a very big impact if the USDA starts to acknowledge that and starts to agree with some of these other estimates."
Other reports indicate the spread in crop estimates is even wider.
"We did see a private analyst come out this week and say 66 million metric (tons of corn), so there is quite a big swing there," notes Angie Maguire, Citizens L.L.C. "A lot of that’s going to depend on their double crop. There is dryness in certain areas, and it’s too wet in others to really get the double corn acres in from what they’re saying. From the soybean perspective, I kind of agree with where the USDA’s at right now. I think what we’re seeing with the dryness is maybe the top end being pulled out."
Meanwhile, better basis figures in parts of the U.S. are presenting opportunities for producers to sell in-bin grain.
"When we look out to March and we think about how much is on-farm right now, I think a lot of that’s going to be coming out of the bin between now and June," Johnson says. "I really think whoever sells first is going to be the winner here because there’s so much to come to the market."
Click the play button below to watch the complete U.S. Farm Report market roundtable, including an overview of the market for oats and USDA’s Feb. 10 supply and demand reports: