Sep 22 / Pedro Schicchi

Grains, Oilseeds and Livestock Weekly Report - 2023 09 22

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"Hemisphere Transition: Discussion on the shift from the US harvest season to the planting season in Brazil.
US Harvest Progress: Progress of corn and soybean harvests in the US is within average, with some minor concerns due to above-average rain, notably along the Western Corn Belt.
Mississippi River: At the same time, higher precipitation could help soften the Mississippi River level issue. Still, surpluses are not too high, CBOT futures front months are found under pressure, and Gulf premiums are likely to find support in the situation.
Early Brazilian Planting: Brazil has started planting summer crops early, although concerns about delays and dry conditions exist. Still, soil moisture levels are not bad, albeit with varying levels."

As one crop cycle concludes, another begins

As USDA has started to report on harvest progress, Brazilian agencies began doing the same for soybean planting.

Starting with the US, Figure 1 shows corn’s harvest progress well within the average for this time of the year. The same is true for soybeans, though only one data point has been issued so far.

There are above-normal rains forecasted for the Western Corn Belt, but not enough to raise too much concern regarding pace (Figure 2). At the same time, this wet pattern is reaching more to the South than in previous model runs. This could help Mississippi River levels (Figure 3), though again, surpluses are not huge at the moment.

The low Mississippi levels are bearish for CBOT futures, but bullish for Gulf premiums, as it keeps more product in the Midwest, but diminishes the supplies at the ports. If we add the harvest pace, this combination is likely to maintain CBOT futures front-month contracts pressured for a while. The curve in carry already shows it.
Figure 1: US Corn - Harvest Progress (%)

Source: USDA

Figure 2: Precipitation Anomaly Forecast – Sep 22 to 28

Source: NOAA GFS, hEDGEpoint

Figure 3: Mississippi River Gauge Height – Saint Louis (ft)

Source: hEDGEpoint, USGS

Moving to Brazil, both summer corn and soybean planting has started (Fig. 4). It was an early start, and it could be linked to producers lobbying state governments to shorten the sanitary window to avoid delays - especially those that have cotton as their second crop, as it is more expensive and more sensitive than corn.

Still, there are concerns regarding the planting pace going forward. In recent years, delays in soybean planting have led to crop failures in both soybeans and winter corn, though the latter is usually more sensitive to the calenda

These fears are mostly linked to the dryness that has been present in most of Brazil, and that forecasts continue to project going forward (Fig. 5). The other side of the argument is that soil moisture is not bad for most of the country (Fig. 6), despite there being regions of concern.

These include Southern Goiás, Minas Gerais, and MATOPIBA, but this last one plants later in the year, so there’s time for it to get better (or worse). For now, it seems like good soil moisture should enable a good pace, but we have to watch how the dry spots evolve as rains remain below normal levels.
Figure 4: Brazil Soybean – Planting Progress (%)

Source: Safras

Figure 5: Precipitation Anomaly Forecast – Sep 22 to 28

Source: NOAA GFS, hEDGEpoint

Figure 6: Rootzone Soil Moisture – Sep 18 (percentile)

Source: hEDGEpoint, NASA

In Summary

In conclusion, crop harvesting in the US is progressing well, but above-normal rain forecasts could be a concern. Mississippi River levels may benefit from this wet pattern. In Brazil, planting has begun early, but dryness raises worries, especially in regions like Southern Goiás, Minas Gerais, and MATOPIBA. Monitoring soil moisture will be crucial for future developments in these key regions.

Weekly Report — Grains and Oilseeds

Written by Pedro Schicchi
Reviewed by Alef Dias


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