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Reuters
3 days ago
- Business
- Reuters
Bumper Brazilian corn crop could spoil US exporters' fun: Braun
NAPERVILLE, Illinois, June 5 (Reuters) - If anything can wreck the party for U.S. corn exporters, it's Brazil. The U.S. Department of Agriculture has sky-high goals for U.S. corn exports in both the current and upcoming marketing years, but the overall potential may be confined by Brazil's current harvest success. As of May 29, U.S. corn exporters had sold 99% of USDA's full-year export outlook for 2024-25, which ends August 31. That is the fullest coverage by this point in a decade, and the figure would generally indicate that the current export target is too low. But by how much? U.S. corn has recently been able to maintain competitive pricing versus Brazil, and 2024-25 U.S. export sales over the last several weeks have been safely above average. However, Brazil just began harvesting its heavily exported second corn crop, and some production estimates have risen notably over the last week or so. Ever since Brazil's second corn output – and exports – exploded in 2011-12, U.S. exporters' ability to make corn sales in the final quarter of the marketing year has been somewhat limited whenever Brazil's crop is strong. Conab's May estimates showed Brazil's 2024-25 second-corn harvest up 11% from last year. Similar past years might imply that the next three months could feature an additional couple million metric tons of U.S. corn sales for 2024-25. USDA pegs 2024-25 U.S. exports at 66 million tons, second to the 69.8 million shipped in 2020-21 when China was a major player. The platform for 2024-25's success started building in the prior year, which boasted a record U.S. corn harvest. But the urge to compare this year with last year should come with extra caveats. Not only was corn cheap and plentiful a year ago, but Brazil's second crop shrank 12% on the year, facilitating above-average sales at the tail end of the 2023-24 U.S. season. Some analysts have surmised that tariff fears caused U.S. corn customers to stock up early on purchases, which cannot be confirmed or denied but could be another possible short-term limitation on U.S. corn sales. USDA's aspirations for U.S. corn exports in 2025-26 are even bigger than in 2024-25, but the feasibility is unclear given that the big 2024-25 Brazilian crop will be hogging global business through the next several months. As of May 29, U.S. exporters had sold just over 3 million tons of corn for export in 2025-26, slightly more than in the last two years but nothing special. Like old-crop sales, new-crop U.S. corn sales are also limited just prior to the start of the marketing year whenever Brazil's second-corn output is solidly up on the year. This can be extended to the other corn exporters, too. Combined 2024-25 corn output in Brazil, Argentina and Ukraine is set to rise 2% on the year, which could keep a lid on 2025-26 U.S. corn sales over the next three months. Apart from Brazil, U.S. exporters' potential success in 2025-26 depends on what happens at home. Although things are not perfect, the 2025-26 U.S. corn crop is off to a promising start with mostly benign weather expected for the first half of June. Over the last two decades, U.S. corn exports have almost never disappointed from initial expectations whenever production meets or exceeds the initial expectations. This offers a chance for U.S. exporters to retain control of their destiny despite ample Brazilian offerings if they can get cooperation from one very finicky source: Mother Nature. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Reuters
25-03-2025
- Business
- Reuters
Soy powerhouse Brazil to seek another record crop in 2026, but by how much? -Karen Braun
NAPERVILLE, Illinois, March 25 (Reuters) - With the 2024/25 soybean harvest still in progress, no one is going to vehemently debate Brazil's 2025/26 production numbers right now. But the discussion could be forced in just a few weeks when the U.S. Department of Agriculture publishes its initial 2025/26 projections, including global supply and demand ledgers where Brazil's soy crop is sure to make a statement. Both USDA and its Brazilian counterpart Conab tend to initially underestimate the top exporter's soybean crop, having done so for seven of the last 10 years. USDA's first official view of Brazil's 2025/26 output is due on May 12 and Conab's will come a few months later. However, USDA's Brasilia attache last week pegged the country's 2025/26 soybean crop at a record 173 million metric tons, up 2% on the year. Official USDA figures and those from its attache do not necessarily have to jibe. This is interesting because for the past five years, USDA's first official estimate has come in above the attache's, and by an average of about 6 million tons. Those differences have stemmed from both area and yield assumptions, though area has been tricky lately. USDA, its attache and Conab have all initially underestimated Brazil's soybean plantings for at least the past five seasons. But how much further Brazilian soybean area needs to expand has come into question recently, especially amid a weak economic outlook for top bean buyer China. HOW MUCH MORE AREA? Brazilian soybean area has increased every year for the past 18 years, growing by 19% over the past four seasons alone. USDA's attache calls for a 1.9% area gain in 2025/26, the smallest yearly rise within what would become a 19-year streak. The attache's forecast is more aggressive than its year-ago idea for a 1% area bump in 2024/25, which has since turned into 2.6%. The bigger gains laid out early this year could potentially prevent larger surprises down the road. But the financial situation in Brazil is a bit more precarious than in recent years, when area really exploded. Three seasons ago, soy production costs for farmers in the top state of Mato Grosso jumped more than 50%, and they have come down only slightly since. With the easing in commodity prices, Brazilian producers are expected to have less available capital in 2025, possibly slowing area conversion. The attache also reports increasing odds that more farmers may declare bankruptcy this season. However, Brazil's weakening currency has insulated its farmers against global price declines to a larger degree than the U.S. producer, for example. In the last year, Chicago soybean futures have lost 17%, but they are down only 5% when priced in reais. Brazil's Central Bank forecasts the real to remain near all-time highs both this year and next. This should keep Brazilian growers active in the global market and entice them to enhance investments if prices rise and production margins improve. In the longer term, sowings are expected to continue an upward trend. Conab has estimated that by 2032/33, Brazil's soybean area and production could reach 56 million hectares and 186.7 million tons, respectively. These numbers would have seemed unfathomable not too long ago, as Brazil's soy crop first exceeded 100 million tons only eight years ago. USDA officially pegs the current 2024/25 harvest at 169 million tons, the same starting point it had nearly a year ago. Although that is record-large, global soybean stocks this year are not seen swelling to the previously burdensome predictions. Next year could be a different story depending on what unfolds in the market. But either way, Brazilian farmers will be planting their next – and likely record – harvest of soybeans just six months from now. Karen Braun is a market analyst for Reuters. Views expressed above are her own. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Reuters
13-03-2025
- Business
- Reuters
What's behind the clashing ideas over Brazil's shrinking corn stocks?
NAPERVILLE, Illinois, March 13 (Reuters) - According to its own statistics agency, Brazil's corn supplies as of a few weeks ago hit the lowest levels in at least a quarter-century. But the U.S. Department of Agriculture does not expect a scenario like that to unfold until early next year. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. So which is it? The USDA-versus-Conab storyline is not new. Controversy erupted last year over the two agencies' highly varying estimates for Brazil's soybean and corn harvests. On a broader scale, the explanation is straightforward. USDA and its Brazilian equivalent Conab hold differences across the balance sheet, spanning both production and demand. This means there is likely no 'right' answer. But with available world corn supplies later this year projected to fall near three-decade lows when compared against demand, the trends in Brazil might be worth unpacking. VITAL REVIEW Before discussing forecasts, it is critical to understand the relevant time frames. For Conab, Brazil's 2024-25 corn marketing year ends on January 31, 2026, while USDA's ends one month later. This March-February Brazilian marketing year plays out on USDA's world corn balance sheet, which reflects an aggregate of local marketing years. Therefore, USDA's world corn stock estimates are not point-in-time but rather span a time frame of several months. That is different from how USDA handles its global soybean ledger, where Brazil and Argentina are shifted to an October-September marketing year. OPPOSING OUTPUT USDA on Tuesday maintained the 2024-25 Brazilian corn crop at 126 million metric tons, though it reduced the 2023-24 harvest by 3 million to 119 million tons. Conab on Thursday increased the 2024-25 crop by less than a million tons to 122.76 million and left last year unchanged at 115.7 million. These changes brought the agencies closer together. Combined over both crop years, USDA now holds a corn output estimate 6.5 million tons higher than Conab, down from 10.3 million last month. The figures never have to converge, though, because for the recent four years, USDA's production numbers remain at least 2.5% above those of Conab. The deviation for the 2022-23 crop, which both agencies agree was Brazil's largest-ever, still sits at 3.9%. BY THE NUMBERS Conab says supplies are tight now, whereas USDA expects them to be fairly tight a year from now. Conab's data shows Brazilian corn stocks around 2 million tons for 2023-24, which ended six weeks ago. Both that figure and the associated stocks-to-use of 1.7% are the lowest in Conab's history back to 1999-00. The Brazilian agency sees a recovery by next January to 5.5 million tons and 4.6%. That compares with decade-averages of about 10.5 million tons and 11%. As of February's end, USDA believes that Brazil's corn stocks totaled 7.5 million tons, down from 10 million in 2022-23 and similar to a decade-average. But it projects 2024-25 stocks plunging to a 23-year low of just under 3 million tons. That corresponds with a 2.2% stocks-to-use ratio, which would be a 42-year low in USDA's database. The recent 10-year average is 7.8%. The one-month shift between the two agencies' marketing years might explain part of the differences. Brazil typically exports no more than 4% of its annual volume in February, the month in question, though domestic consumption accounts for much more usage. USDA is more optimistic on Brazil's corn exports than Conab. On average over 2023-24 and 2024-25, the U.S. agency has Brazil exporting about a third of what it produces, above Conab's assumption near 30%. Recent exports do not give the appearance of abundant supply as monthly Brazilian shipments have been a bit below average. Future export potential depends on Brazil's newly sown crop as well as the upcoming corn harvest in the United States, the top exporter. While the timing is a bit different, both agencies' calls for well-below-average Brazilian corn supplies at some point within the year's span certainly highlight the market's recent concerns about dwindling stockpiles, putting pressure on this year's crops to perform. (The opinions expressed here are those of the author, a market analyst for Reuters)
Yahoo
24-02-2025
- Business
- Yahoo
First eggs, now coffee: The price of roast beans hits highest mark in 50 years
Coffee beans cost more now than any time in the last 50 years, leaving producers to pass along the cost of doing business to their customers. Back at the tail end of January, coffee prices rose to more than $3.60 per pound for arabica coffee beans. The price skyrocketed because Brazil — easily the world's largest coffee bean producer — was running out of supply. Last year, Brazil suffered a severe drought, and even though this year the nation has fared better, the upcoming bean crop is expected to be 4.4 percent smaller, according to Conab, a Brazilian food supply agency. Climate change, driven by human burning of fossil fuels, increases the global temperature. Higher temperatures increase the rate at which evaporation occurs, meaning there is less ground water and drier vegetation. This makes crops less viable and also creates ideal conditions for wildfires. 'Older methods of production have stripped soil health and fertility, and they don't allow for resilience against climate change,' Amanda Archila, executive director of Fairtrade America, a Washington-based nonprofit, told the New York Times. 'Higher prices are where we need to go, pricing that allows these farmers to invest in the future of coffee.' The idea is that coffee producers can take their profits gained from higher prices and put them toward climate change mitigation measures, like growing more trees to shade the coffee beans. Yannis Apostolopoulos, the CEO of Speciality Coffee Association, told Food & Wine last month that in addition to climate change, both "economic pressures" and "geopolitical uncertainty" are also affecting the price of coffee beans. Back in January, Donald Trump threatened to slap Colombian goods with a 25 percent tariff in an attempt to strongarm the nation into letting him dump refugees and deportees inside its borders. While that wouldn't necessarily increase prices for coffee producers — at least not initially — it would certainly have kicked up the cost for consumers, who in turn might be forced to buy less overall to account for the price increase. Colombian president Gustavo Petro caved to Trump's demands, stopping the tariffs from being placed on his country's products. The Trump administration warned Colombia that the tariffs would be held "in reserve" and could be brought back if the South American nation stepped out of line. Even if Trump doesn't follow through with his tariff threats — he backed down from similar ultimatums he gave US allies Canada and Mexico, at least for now — the threats themselves are enough to send global markets into a panic. 'When President Trump even makes threats about tariffs, the minute you introduce uncertainty into a global trade system, and that's what global trade is, things are going to get a little crazy,' Dan Gardner, the president of Trade Facilitators, a supply chain and logistics company, told CNN. For many American households, coffee is a daily use item and a regular buy at the grocery store. Thanks to human driven climate change and the Trump administration's economic intimidation tactics, regular purchase items like coffee and eggs are becoming less and less affordable. Like coffee, eggs also hit a record high in January, when a dozen cost on average $4.95. Since then, the average cost has ballooned to $8, according to the US Department of Agriculture. Since the beginning of 2024, the cost of eggs rose by 65 percent, according to consumer price index data. Unfortunately there is no indication that the cost of either staple is going to go down anytime soon. Trump said on Friday that his Secretary of Agriculture, Brooke Rollins, will do "something" about the egg prices. 'She's going to do something with the eggs,' Trump said. He insisted that "we inherited all the problems.' The price of eggs has nearly doubled in the last six week, according to News Nation. The primary driver of the increase is scarcity; due to a widespread outbreak of the avian flu, many egg-laying livestock birds had to be culled. That reduced egg production, and we're now seeing the effects reflected in the prices we pay at the grocery store. The current cost of staples like eggs and coffee has ensured that Trump couldn't keep one of his campaign promises — to bring down prices on day one of his presidency. 'When I win, I will immediately bring prices down, starting on day one,' Trump said in August.
The Independent
24-02-2025
- Business
- The Independent
First eggs, now coffee: The price of roast beans hits highest mark in 50 years
Coffee beans cost more now than any time in the last 50 years, leaving producers to pass along the cost of doing business to their customers. Back at the tail end of January, coffee prices rose to more than $3.60 per pound for arabica coffee beans. The price skyrocketed because Brazil — easily the world's largest coffee bean producer — was running out of supply. Last year, Brazil suffered a severe drought, and even though this year the nation has fared better, the upcoming bean crop is expected to be 4.4 percent smaller, according to Conab, a Brazilian food supply agency. Climate change, driven by human burning of fossil fuels, increases the global temperature. Higher temperatures increase the rate at which evaporation occurs, meaning there is less ground water and drier vegetation. This makes crops less viable and also creates ideal conditions for wildfires. 'Older methods of production have stripped soil health and fertility, and they don't allow for resilience against climate change,' Amanda Archila, executive director of Fairtrade America, a Washington-based nonprofit, told the New York Times. 'Higher prices are where we need to go, pricing that allows these farmers to invest in the future of coffee.' The idea is that coffee producers can take their profits gained from higher prices and put them toward climate change mitigation measures, like growing more trees to shade the coffee beans. Yannis Apostolopoulos, the CEO of Speciality Coffee Association, told Food & Wine last month that in addition to climate change, both "economic pressures" and "geopolitical uncertainty" are also affecting the price of coffee beans. Back in January, Donald Trump threatened to slap Colombian goods with a 25 percent tariff in an attempt to strongarm the nation into letting him dump refugees and deportees inside its borders. While that wouldn't necessarily increase prices for coffee producers — at least not initially — it would certainly have kicked up the cost for consumers, who in turn might be forced to buy less overall to account for the price increase. Colombian president Gustavo Petro caved to Trump's demands, stopping the tariffs from being placed on his country's products. The Trump administration warned Colombia that the tariffs would be held "in reserve" and could be brought back if the South American nation stepped out of line. Even if Trump doesn't follow through with his tariff threats — he backed down from similar ultimatums he gave US allies Canada and Mexico, at least for now — the threats themselves are enough to send global markets into a panic. 'When President Trump even makes threats about tariffs, the minute you introduce uncertainty into a global trade system, and that's what global trade is, things are going to get a little crazy,' Dan Gardner, the president of Trade Facilitators, a supply chain and logistics company, told CNN. For many American households, coffee is a daily use item and a regular buy at the grocery store. Thanks to human driven climate change and the Trump administration's economic intimidation tactics, regular purchase items like coffee and eggs are becoming less and less affordable. Like coffee, eggs also hit a record high in January, when a dozen cost on average $4.95. Since then, the average cost has ballooned to $8, according to the US Department of Agriculture. Since the beginning of 2024, the cost of eggs rose by 65 percent, according to consumer price index data. Unfortunately there is no indication that the cost of either staple is going to go down anytime soon. Trump said on Friday that his Secretary of Agriculture, Brooke Rollins, will do "something" about the egg prices. 'She's going to do something with the eggs,' Trump said. He insisted that "we inherited all the problems.' The price of eggs has nearly doubled in the last six week, according to News Nation. The primary driver of the increase is scarcity; due to a widespread outbreak of the avian flu, many egg-laying livestock birds had to be culled. That reduced egg production, and we're now seeing the effects reflected in the prices we pay at the grocery store. The current cost of staples like eggs and coffee has ensured that Trump couldn't keep one of his campaign promises — to bring down prices on day one of his presidency. 'When I win, I will immediately bring prices down, starting on day one,' Trump said in August.
