AiQ published the Soy, Corn, and Timing: 2024/25 “Way Too Early” S. Am Outlook September 13, 2024. It is now the second week of December, and we get our first look at a forecast that includes the beginning of the critical growing period.

Here were the themes prior to planting:

It’s all about “Timing.” Rains were needed in the first half of October for timely planting. It happened
Soybean fundamentals get increasingly bearish with good weather. Even more so today
Due to weather and prices, corn was at a much greater production risk. This was true and still is, but the situation has improved
Sunflower had the potential to be huge if Argentina’s farmers de-risked hard. This did not happen. AiQ raised corn production faster than anticipated.
US newsletter groups would get bullish because of “red maps.” This happened

October was an outstanding month for planting across all the major growing regions.

Brazil’s seasonal rains caught up after a historically dry summer. We covered how the US coal industry was one of the biggest beneficiaries of Brazil’s drought. Ecuador is dealing with nationwide rolling blackouts due to the shortage of hydroelectric power.

Here are the Latest Production Figures:

Soybeans

*This scenario could add 15 tons or more to world stocks.*

Corn

*The US will resume its role as residual supplier if production is near the top end of the range.*

Our Models Will Narrow this Range with Confidence.

AiQ’s models crunch billions of daily data points to narrow the range. We will publish our “most recent estimate” every Wednesday.

The model outputs account for all realized weather and the most recent 15-day forecasts, providing real-time, predictive updates and confidence legacy guessers cannot compete.

The post below from ProFarmer is the same silliness as previous years. Their legacy crop guesser increased the crops and then cited areas of four states that account for 60 million tonnes of soybeans as the “only areas of worry.”

*Here is the secret. If prices go down, US crop forecasters will raise production numbers. If prices rise, they will cut production numbers.*

As we point out below, many of these areas of Brazil could use dry weather to improve development and ensure a timely harvest for second cropping.

Our national yield estimates remain muted. Argentina has much greater variability and upside if the weather trend continues.

*Yield Rise to 3.62 (Brazil) & 3.02 (Argentina)*

What Are the Main Areas of Risk to Monitor?

*RGDS received 30% more rain than the 5-yr average since the beginning of Oct.*

Argentina is the main risk, so keep an eye on the GFS. The dryness has expanded into southern Brazil, but these areas could use the change. A brief dry spell will be good for crop development, assuming rains return by the end of the month (the chart above is RGDS).

*The GFS is leading the expanding drought anomaly north and east.*

The main weather risk for the market to focus on is Argentina. The dryness expanding over the last 96 hours is centered right over the Nucleo Zone and moving into Brazil.

*Watch the GFS for the southern portions of South America.*

The chart below from the BCR shows that 47% of all agriculture production is within this radius. This should contextualize how enormous the export potential for Argentina is if the weather cooperates and the risks (yet again this year) if it does not.

The key takeaways from the September update have not changed. The soybean outlook is more bearish than the corn situation. Thanks to the October/November weather, the production potential for corn is much higher than two months ago.

Resuming its Role as Residual Supplier

United States agriculture has two distinct features. First, the insurance system encourages production even if planting elsewhere would be a bad bet. Yes, farmers respond to prices, but farmers in the USA will bet on the come at cost-of-production levels because there is a good chance prices will rally at some point. The various insurance products (crops, grazing, margin protection, precipitation, etc) make this more feasible than anywhere else.

Second, the USA has the most developed system for getting grain from the middle of the country onto a vessel with very short notice, whether it originates on a barge in St. Louis or a shuttle loader near Ames, IA.

This means the USA will resume its role as the world's residual supplier if South American corn production is near the upper end of our range. The US producer has invested in on-farm storage and will market crops in response to price signals and demand shifts.

Social media is circulating charts with “global corn stocks ex-USA.” There are two problems with these charts.

They are meaningless. It’s perfectly reasonable to pull China out of global stocks of grains since they are unavailable to the world’s consumers.
It shows a lack of awareness of the traditional role of the USA producer in an environment of ample global supplies.

*AiQ’s Chatbot can answer these questions and much more.*

One final complicating factor is the role of exchange rates. The dollar is strong against every currency other than the Argentina Peso (this is a story for a different day). Brazilian, Russian, and French farmers will be more incentivized to market grain than their USA counterparts.

*The market shrugged off Brazil’s attempts to pacify bond investors looking to bet against the country’s fiscal spending.*

ArchaiQ (AiQ) is a partner of Easy Newz. This is not trading or investment advice. Trading Futures is high-risk; please consult with a professional. AiQ receives input from partners and experts worldwide, whose opinions may be reflected in the figures above.

The Real South American Weather Market Begins Now. AiQ’s Updated Production.