With 75% of the corn in the U.S. mature, 10% ahead of the historical average, one would have expected to have seen the harvest pace at a comparable number, but that was not to be the case. As of Sunday, the USDA estimates that 15% was harvested, which is 1% behind the average pace. One certainly cannot fault anyone for letting mother nature take care of the drying process if the crop is standing well, and the weather outlook is good, but I suspect part of the delay comes from the fact that farmers were actively taking care of beans. By the weekend, bean harvest had reached 20%, which was up 14% for the week and moves us to 5% ahead of average. As is always the case, both bulls and bears can find yield stories to back up their market biases.
On the flip side of the equator, planting progress in Brazil has been painfully slow as farmers await better rainfall before planting. According to AgRural, .7% of beans are planted, compared with an average of 2.7%. While not critical yet, this potentially slow start is beginning to raise the anxiety levels for several reasons. First, for the fact that it is extremely dry, second, the later the beans go into the ground, the less opportunity they will be for a solid safrinha corn crop, and third, and Brazil is already confronting a very tight domestic bean situation, importing already from Paraguay and Uruguay, and delayed planting would, of course, push harvest back further as well. Full-season corn planting progress has been a bit better, and it is estimated to be 26% complete. Corn planters in neighboring Argentina have also been slow to move out of the shed, and the Buenos Aires Grain Exchange estimates there is just 11% in the ground compared with an average of 14%. Bean planting in that nation does not really begin until mid-October.
Before we shift our focus northward, there was one other story from Brazil worth mentioning. Aprosoja, which is the largest farm lobbying group in Brazil, is breaking ranks with the Brazilian Agribusiness Association, or Abag, over deforestation in the Amazon. Abag has been calling on the Bolsonaro administration to take action to slow down expansion in the Amazon, which is not a popular stance within the farm group. While I doubt they are receiving any pushback from China, who only appears to be concerned about environmental issues when it can be used to their advantage, but other bean purchasers such as the EU, have expressed concerns, and some refuse to purchase products, be that soy or livestock that has come from disputed territories.
There would appear to be no doubt that China wants to move aggressively as it pertains to food security at home. According to a cabinet document, they are pushing to produce 95% of their own pork, 85% of beef and lamb, 70% of milk, and to remain self-sufficient in eggs and poultry. As I have commented many a time, the leadership in that nation understands all too well that empty stomachs and high food prices have inspired many a revolution.
House Democrats proposed a revised $2.2 trillion economic stimulus plan yesterday, and while it may go nowhere with the Senate, it was enough to provide equity markets with a rebound yesterday. We shall have to see what tonight’s debate does for markets.
This morning the USDA reported a sale of 100,000 MT of bean to Mexico. It is notable that China has technically been absent for the past three days.
Once again, here are the trade estimates for tomorrow’s quarterly grain stocks report; Corn inventory as of September 1st is expected to be 2.250 billion, soybeans at 576 million, and wheat at 2.242 billion.
