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Canada Know-Risk Market Outlook | Meaningful Rains in the Forecast for Brazil

By: StoneX Grains Team- Canada, StoneX Grains Team- Canada

Canada Know-Risk Market Outlook
 
Craig Turner
Office: 312-706-7610
Twitter: @Turners_Take
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S. Am Weather |  Arg and Brazil both received scattered showers over the past 24 hours.  Meaningful rain is expected in Brazil for Mato Grosso and Goias over the next two days.  
Grains & Oilseeds |  A farmer association in Mato Grosso yesterday reported survey-based estimates for a 36.15 MMT soybean crop for the state this season, down 9.16 MMT from last season due to hot and dry weather reducing yields. They also see second crop corn acreage reduced by almost 25% due to the hot and dry weather pushing back the planting window into a less-ideal climate situation.  Some analysts are taking a 150 MMT soybean crop, which is 11 MMT lower than the USDA.  
The general rule is you take half the production loss and assume it comes back to the US as exports.  11 MMTs is 400mm bu.  Brazil does have excess stocks to make up for production losses but not 11 MMT.  Half of 400 is 200mm bu, and the US does not have and extra 200mm soybeans to sell.  IF, and it is a big IF, but if Brazil is 150 MMT, that means the US needs to price ration 100mm of exports to account for additional demand from S. American production losses.  That could put old crop soybeans between $14 and $15 and supportive of canola.
Outside markets are generally supportive as the Fed has signaled they may be done fighting inflation.  Stocks are near all time highs, crude oil is up another $1 today, gold is trending higher and the USD lower.
 
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