Wet weather may be slowing planting in the American Midwest, but the big crops expected in South America this year will continue to overhang the corn and soybean markets, according to a U.S. analyst.
Speaking last week as part of an MGEX-sponsored crop call, Randy Martinson of Martinson Ag Risk Management, admitted the big numbers from South America suggest there’s little reason for Northern Hemisphere producers to expect any kind of significant price rally, especially given the fact the Brazil soybean harvest is now just about wrapped up.
Last week’s USDA supply-demand update further confirmed the big crops on the way from South America. In that report, the USDA raised its estimate of the 2016-17 Brazilian soybean crop to a record 111 million tonnes, up 3 million from the March forecast. At the same time, the USDA bumped its estimate of the Brazilian corn crop another 2 million tonnes higher to 93.5 million, an increase of 7 million from just two months ago and nearly 40% above last year
As for Argentina, forecasted soybean production was revised 500,000 tonnes higher to 56 million, still below last year’s 56.8 million tonnes. Based on reports of better-than-expected yields, the size of the Argentine corn crop was raised 1 million tonnes from March to 38.5 million, well above 29 million in 2015-16.
“The numbers we’re seeing right now in this report are saying ‘maybe not very much,’” Martinson replied, when asked about the likelihood of higher prices.
For here on out, market direction will depend on how spring planting goes in the US, and how the Argentina soybean harvest – which is still only in the beginning stages – eventually shakes out, Martinson added.
In a separate interview, Scott Capinegro, president of Barrington Commodity Brokers in Barrington, Ill., agreed there’s little upside potential for soybeans or corn, especially since South American is not experiencing the same kind of weather problems that limited production last year at this time – drought in Brazil and too much rain in Argentina.
“They don’t have problems this year they have a massive crop; that’s the whole darn thing.”
Source: DePutter Publishing Ltd.