SASKATOON — Grain markets are shifting gears now that the February WASDE report is in the rearview mirror, says an analyst.
“The market will largely go back to trading South American weather,” DTN’s lead analyst, Rhett Montgomery, said during a recent webinar.
That weather will dictate how Argentina’s corn and soybean crops finish and the planting pace of Brazil’s winter or safrinha corn crop.
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Harvest is already underway for Brazil’s soybean crop, and it is going to be a “whopper of a record,” according to MarketsFarm analyst Bruce Burnett.
The U.S. Department of Agriculture is forecasting 169 million tonnes of production, a 10 per cent increase over last year.
Brazil’s massive crop has hurt U.S. soybean sales, which started to slow in January, which is about two months earlier than usual, said Montgomery.
Arlan Suderman, chief commodities economist with StoneX, thinks China will buy about 23 million tonnes of U.S. soybeans in 2024.
It wasn’t that long ago that U.S. sales to that market averaged 35 to 40 million tonnes.
“Chinese demand is flattening,” he said.
A trusted source of his in China believes imports of U.S. soybeans will be down a further 11 million tonnes in 2025.
South American soybeans are favoured for several reasons, including currency exchange rates.
Soaring demand from the U.S. biofuel industry has helped offset slumping exports, but there are some question marks about that market as well.
It is unclear whether U.S. President Donald Trump’s administration will adopt the new 45Z tax credit proposed by the former administration.
Suderman said the rumour is that it will adopt the new credit with some adjustments that may lead to more favourable carbon intensity scores for soybean and canola oils.
But in the meantime, biomass-based diesel production is down 40 per cent from where it was in December as the industry sits in limbo.
“We’re waiting to hear from the Trump administration,” he said.
“We’re just not a high enough priority for him right now.”
The USDA cut one million tonnes from its Argentina corn production estimate and three million tonnes from the country’s soybean number in its February WASDE report.
“Dryness in some of Argentina’s growing regions has diminished crop conditions,” the USDA stated.
Montgomery said much of the country’s soybean crop has yet to reach the crucial stage of development.
Weather in February and March will determine the fate of the crop. There has been some improvement of late from the hot and dry conditions that were prevalent at the start of 2025.
Suderman said the country received 108 millimetres of rain between Jan. 1 and Feb. 10.
Crop ratings are now good in the most productive regions of the country.
Satellite-based maps of vegetative growth indicate crops are slightly below average but still within a normal range.
“Overall, things have improved,” he said during his WASDE webinar.
Burnett is not convinced that is the case.
“The rains stabilized things in Argentina; I wouldn’t say they have improved them a heck of a lot,” he said.
“They need more follow-up rains, definitely.”
The weather forecast for Feb. 11-25 calls for rainfall in Argentina and dryness in Brazil’s soybean belt, which would be just what the doctor ordered.
Burnett said Brazil’s safrinha corn planting has been delayed by the late soybean harvest caused by wet weather, so the timing of the dry conditions is ideal.
Once South America’s picture comes into sharper focus, the market’s attention will shift to the U.S. crop.
A weak-to-moderate La Nina was in place this winter. Suderman said when that happens, it tends to be followed by hot and dry conditions in the U.S. Midwest during the May through August growing season.
European weather models suggest that could be the case again this year.
They are showing that the dry conditions in the central and southern Plains will push further north and east into the northern Plains and the western corn belt during the May through July period.
However, it looks like it could be wet in the eastern part of the corn belt.
Contact sean.pratt@producer.com
