Brazil

Brazil Turns to Sorghum Silage Where Corn Struggles

Tue, 31 Mar 2026 18:05:31 GMT

Brazil is famous for corn and soybeans, but in the country’s toughest, driest regions, farmers are starting to look more seriously at sorghum for silage.

Arthur Behling Neto, professor at the Federal University of Mato Grosso, says sorghum is becoming an important forage option for livestock producers who need reliability under tough growing conditions — without the high input costs associated with corn.

“Here in Brazil, as I believe it is in the U.S., corn is the main plant for ensiling because it has very good nutritional quality and characteristics for ensiling,” Neto explained during a recent episode of the “Dairy Nutrition Blackbelt Podcast.” “Sorghum is usually an alternative for areas that corn does not grow very well, especially because of the lack of proper rain.”

This is particularly true in eastern Brazil and drier parts of Mato Grosso where sorghum’s drought tolerance gives it an advantage. Economics also play a role.

“Compared to corn, the seed is cheaper and we use fewer pesticides. We also don’t need as much fertilizer, so it’s cheaper than corn for our farmers,” Neto adds.

As input prices keep rising, sorghum’s durability and lower price tag are catching more farmers’ attention.

Different Types of Sorghum

Sorghum in Brazil serves several purposes. Neto describes five main types:

Grain sorghum
Forage sorghum
Sorghum for cutting and grazing
Broom sorghum
Energy-focused sorghum, such as sweet sorghum and biomass sorghum

Grain sorghum remains the most widely grown overall. But when it comes to silage, forage sorghum and biomass sorghum are gaining traction.

“For silage, we use more forage sorghum,” Neto says. “However, we are also increasing the use of biomass sorghum because of its very high productivity.”

His research team is working to identify varieties that maintain good nutritional value while improving yield.

“What we are doing here is looking for different varieties that can produce more but still keep the quality that forage sorghum usually provides for the animals,” he says.

Match Sorghum to Beef and Dairy

In Central Brazil, sorghum silage is used primarily in beef cattle systems.

Forage and biomass sorghum provide the volume and fiber needed for cost-effective beef diets. Dairy producers, however, often prioritize energy density and may turn to grain sorghum silage.

“When we talk about dairy cattle, some farmers look for grain sorghum because it has higher energy content and lower fiber,” Neto explains. “It is close enough to corn.”

Although grain sorghum produces less tonnage than forage types, its nutritional profile can better match the needs of dairy cows.

forage_sorghum

(John Bernard/UGA)

The Yield and Quality Trade-Off

One of the main challenges with sorghum silage is balancing yield and nutritional quality. Grain sorghum plants are relatively short and produce lower yields, but they deliver higher energy concentrations.

“Grain sorghum usually grows about 3.5' to 5' tall and produces around 10 to 14 tons per acre,” Neto says. “The yield is not very high, but the energy content is.”

Forage sorghum grows much taller and delivers substantially more tonnage.

“Our forage sorghum can reach 8' to 12' in height and produce between 18 and 32 tons per acre,” he explains.

Biomass sorghum pushes yields even further. Neto’s research team is evaluating varieties capable of producing 35 to 55 tons per acre.

However, extremely high yields often come with reduced feed quality.

“When we reach these very high yields, fiber content can go up to 70%,” Neto says. “Crude protein can drop to about 5% to 6%, and lignin can reach 8% to 10%.”

Because of this, his team is searching for hybrids that maintain nutritional value while still delivering strong yields.

sorghum

(Darrell Smith)

Managing Tall Crops

Biomass sorghum can grow exceptionally tall, sometimes reaching 14' to 20'. To manage these large plants, producers typically harvest them in two cuttings rather than waiting for full maturity.

“Our biomass sorghum has a cycle of about 180 days,” Neto says. “We plant at the beginning of the rainy season in October. The first cut is usually in December or January, and the second cut happens around April.”

Plants are typically cut about 8" above the soil surface.

For silage, Neto generally targets 28% to 30% dry matter. While the traditional recommendation is 30% to 35%, slightly earlier harvest can help prevent grain from becoming too hard for animals to digest.

Sugar Content and Fermentation

Sorghum also contains significant levels of natural sugars, which can aid fermentation.

“For forage sorghum, we usually have between 15% to 18% water-soluble carbohydrates,” Neto says. “That’s very good for ensiling.”

Biomass sorghum tends to fall slightly lower, around 12% to 15%. Sweet sorghum, however, can contain dramatically higher sugar levels.

“Sweet sorghum can reach 30% to 35% water-soluble carbohydrates.”

While these sugars help drive fermentation, they can also lead to ethanol production, similar to what occurs with sugarcane silage.

“We sometimes have problems with ethanol fermentation,” Neto explains. “But with proper additives, we can still produce very good sweet sorghum silage.”

Forage_Sorghum

A Complement to Corn

Despite its growing role, Neto emphasizes sorghum is not meant to replace corn silage entirely.

“Sorghum silage is increasing in Brazil because it is a cheaper alternative for some farmers,” he says. “However, I do not believe it will reach the same levels as corn silage.”

Instead, he sees sorghum as a complementary crop that provides flexibility when corn production becomes difficult.

“We don’t want it to substitute corn,” Neto says. “We only want to use it when corn cannot produce very well.”

For farmers working in hotter, drier regions with limited inputs, that flexibility may be exactly where sorghum silage delivers the most value.

For more on silage, read:

The New Beef Powerhouse? As Brazil Overtakes the U.S., Here’s What It Means

Tue, 13 Jan 2026 21:54:27 GMT

The global beef landscape is witnessing a historic changing of the guard. According to recent reporting from Reuters , Brazil has officially surpassed the U.S. as the world’s leading beef producer.

While the U.S. industry grapples with a significant herd contraction, Brazil’s production has defied earlier bearish forecasts to take the top spot on the global stage.

In 2025, U.S. beef production fell by 3.9%, dropping to 11.8 million tons. In stark contrast, Brazil’s production, which analysts at Rabobank previously expected to decline, surged by 0.5% to reach 12.5 million tons in carcass weight equivalent.

And as Mike North of Ever.ag and Dan Basse, president of AgResource Company, told “U.S. Farm Report,” Brazil’s growth isn’t a shock, but it is something that is changing the global dynamics of the beef industry.

The Feed Engine: Why Brazil’s Growth Isn’t a Shock

For many in the industry, Brazil’s ascent is the result of years of aggressive agricultural expansion. Mike North, of Ever.ag, notes the foundation of Brazil’s livestock success is its massive grain production capacity.

“Livestock industries depend on the availability of feed, and let’s look at the track record,” North explains. “They’re continuing to grow bigger and bigger crops each year. As we look at their exports, yes, they’ve become a growing partner to China, especially in our absence, but they have enough there to also feed a growing livestock industry.”

North points out Brazil’s “double-crop” system, planting soybeans followed immediately by a second crop of corn (safrinha), has created a consistent, high-volume feed supply that the U.S. is finding harder to compete with.

“The writing’s kind of been on the wall as they grow more and more soybeans and then backfill that during the second crop with more and more corn,” North says. “The gates are open, and they walk through them. This doesn’t come as a shock.”

However, North warns that volume isn’t everything. Brazil still faces hurdles in global perception.

“It’ll be an interesting thing to see what they do as those cattle leave the feedlot, go to processing, and whether or not they can meet all the phytosanitary concerns that the world demands as that meat leaves the country,” he explains.

A Shift in Market Sentiment: From Bullish to Neutral

For the past several years, Basse has been one of the most vocal bulls in the cattle market. However, the combination of Brazil’s dominance and shifting domestic factors has caused him to re-evaluate his position.

“I’ve been bullish for about the last four years,” Basse admits, “but I’m starting to see where there’s some solutions to the tightness in the beef market in particular. My outlook is starting to be a little more neutral, or let’s say, in a wide-swinging market.”

Basse notes international beef is increasingly filling the void left by the shrinking U.S. herd. Imports from Brazil and Australia are becoming a “solution” to high domestic prices, potentially capping the market’s upside.

“As you look at Australian and Brazilian imports of beef, it is going to be something that will keep this market under the high that we scored last October,” Basse says. “I’d be a little careful here on feeders, because while people are still optimistic, I’m becoming less bullish of cattle just based on imports.”

The “Ozempic” Factor and the Dairy Influence on Supply

Beyond international trade, Basse says internal shifts in the U.S. protein market are also underway. Interestingly, he says that while general protein demand remains high, partially influenced by health trends and weight-loss medications like Ozempic, the U.S. is finding new ways to supplement beef supplies.

“As we look at the dairy herd, we’re keeping back numbers,” Basse says. “We’re seeing more cross-calves being produced by the dairy industry. Between that and the expansion of imports into the United States, the supply picture is changing.”

Looking Toward the Horizon

While Brazil’s production numbers are the headline, several wild cards remain for 2025. Basse points to the upcoming USDA inventory report as a critical data point that will determine the next leg of the market. Additionally, biological threats remain a concern for the coming year.

“Screwworm is something we’ll have to deal with as we turn the page to April or May of next year,” Basse cautions.

For now, the U.S. cattle industry finds itself in a period of transition, watching a southern competitor take the lead while navigating a domestic market that might have already seen its historical highs. Yet, as the U.S. cattle herd remains tight, Brazil could continue to outproduce the U.S., just based on the fact it will take years for the U.S. to rebuild the cattle herd. And some economists think the herd might never get back to cattle numbers the U.S. saw at its highs.

U.S. Drops 40% Tariff on Brazilian Beef in New White House Executive Order

Fri, 21 Nov 2025 01:31:42 GMT

A White House Executive Order issued Thursday modifies the scope of earlier tariffs placed on products from Brazil, effectively removing the additional 40% duty applied to Brazilian beef. The change reverses part of a July trade action that had imposed elevated import duties on multiple categories of Brazilian goods. It’s the latest effort by the Trump administration to bring food prices down for Americans.

Brazil is the world’s largest beef exporter, and its product plays a key role in filling U.S. demand, especially in processing beef and manufacturing trim. The tariff increase earlier this year had raised costs for processors and food manufacturers, tightening supply availability and contributing to price pressure.

This latest move follows an Executive Order signed on Friday that modified the scope of the reciprocal tariffs he first announced on April 2, 2025. The Friday EO exempted several agricultural products from tariffs , including fruit, coffee and fertilizer.

What Thursday’s Executive Order Does

According to the new order, certain agricultural imports from Brazil are now exempt from the extra ad valorem tariff that had been layered on top of existing duties. Beef is among the commodities specifically impacted — meaning importers will no longer pay the higher tariff rate that had been in effect since mid-summer.

A complete list of the products that will no longer face the 40% tariff was posted online. That list includes the following beef products:

Fresh or chilled beef
Frozen beef
Edible bovine offal, fresh or chilled
Edible bovine offal, frozen
Salted, dried, smoked or brined beef

Read More: What Does Talk of $10 Ground Beef Mean to Producers?

Why the White House Lifted the Tariff

In the Executive Order, President Donald Trump specifically referenced the call he had with Brazilian President Luiz Inácio Lula da Silva on Oct. 6, which he said addressed concerns in the previous Executive Order that added the additional tariffs.

“These negotiations are ongoing. I also have received additional information and recommendations from various officials who, pursuant to my direction, have been monitoring the circumstances involving the emergency declared in Executive Order 14323,” said Trump in the Executive Order. “For example, in their opinion, certain agricultural imports from Brazil should no longer be subject to the additional ad valorem rate of duty imposed under Executive Order 14323 because, among other relevant considerations, there has been initial progress in negotiations with the Government of Brazil.”

The Executive Order went on to say: “after considering the information and recommendations these officials have provided to me and the status of negotiations with the Government of Brazil, among other things, I have determined that it is necessary and appropriate to modify the scope of products subject to the additional ad valorem rate of duty imposed under Executive Order 14323. Specifically, I have determined that certain agricultural products shall not be subject to the additional ad valorem rate of duty imposed under Executive Order 14323.”

Accordingly, an updated version of Annex I to Executive Order 14323 is attached to this order, which shall be effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on Nov. 13, 2025. In my judgment, these modifications are necessary and appropriate to deal with the national emergency declared in Executive Order 14323.

Background on Tariffs on Brazilian Beef

The Trump administration issued an executive order on July 30, 2025, instituting an additional ad valorem duty of 40 % on many products of Brazilian origin. That 40% duty was in addition to an existing 10% tariff under a separate “reciprocal tariff” measure —bringing the total effective tariff to about 50% on most affected Brazilian goods.

Fear of Trump Dumping Tariffs Caused Selloff in Cattle Earlier This Week

Even the fear of Trump removing the steep tariff on Brazilin beef caused cattle prices to tank earlier this week.

Brad Kooima with Kooima Kooima Varilek told Michelle Rook on Monday that concerns of the tariff being lowered was part of the selloff in the cattle futures last week and why the market started off lower Monday.

Kooima said futures stabilized after it was confirmed the 50% tariff on Brazil beef was only lowered 10%.

Looking ahead, Rook reports the other major issue hanging over the cattle market is when the Trump administration will reopen the Mexican border to live cattle import. Some reports say the Trump administration is pushing for that to happen in January.

Read More: Did the Administration’s Plan to Lower Beef Prices Wreck the Bull Run in the Cattle Market?

'Everything’s a Game of 3D Chess': The Real Reason Behind U.S. Ties to Argentina

Fri, 24 Oct 2025 19:32:25 GMT

The U.S. is tightening ties with Argentina, and that’s raising eyebrows across farm country.

From a $20 billion bailout to plans to import Argentine beef, farmers and ranchers say the growing alliance feels like it’s coming at the expense of U.S. agriculture.

But according to Arlan Suderman, chief commodities economist with StoneX, there’s more to this story, and it has everything to do with China .

A Geopolitical Chess Match

“Everything’s a game of 3D chess,” Suderman explains. “At the center of it is China.”

For years, China has been strengthening ties with Argentina, investing heavily in infrastructure and agriculture to secure long-term supply lines and influence. Suderman says the U.S. sees an opportunity to pull Argentina away from Beijing’s orbit, using economic incentives to win its allegiance.

“The White House sees this as a way to create a split between Argentina and China,” Suderman says. “It’s not just about soybeans or beef. It’s about global positioning.”

The Beef Backlash

But for cattle producers, that strategy feels like betrayal. President Donald Trump’s recent talk of importing Argentine beef sparked anger across rural America. Many worry increasing imports will undercut domestic markets.

Suderman urges producers to stay calm. He points out the announced beef imports, around 80,000 metric tons, are only equal to about two day’s worth of U.S. beef production.

“It’s not enough to impact prices,” he says, “but it does show a disconnect between Washington and agriculture.”

He adds that advisers to the president might have misunderstood how ag markets work.

“These aren’t controlled industries like pharmaceuticals,” Suderman notes. “Ag markets are driven by supply and demand, and right now, we have record demand with tight supply.”

Soybean Farmers Feel Left Behind

While beef producers protest, soybean farmers are already bruised. Argentina’s temporary suspension of export taxes earlier in the year allowed them to undercut U.S. prices and quickly sell beans to China — a major blow to American growers. Suderman says it’s a reminder that the U.S. is no longer the world’s low-cost soybean producer.

“Argentina and Brazil have a cheaper currency and lower costs,” he explains. “And China has been investing there for decades.”

Suderman says he’s been warning the industry for years that the U.S. would eventually lose China as its top soybean buyer.

“This didn’t happen overnight,” Suderman says. “China has been building toward this for 20 years. The current administration may have sped it up, but it was coming.”

Beijing’s refusal to buy American and its pivot to Brazil could be less about economics and more to do with politics. “It’s a calculated decision about control and national leverage, not about getting the cheapest beans,” says one ag economist. Read more here.

Caught in a Bigger Battle

Beyond agriculture, Suderman says the real fight isn’t over soybeans — it’s over rare earth minerals. China currently controls about 90% of the world’s processed rare earths, which are essential to making electronics and advanced defense systems.

“That’s the real leverage,” he says. “Soybeans are small compared to the rare earth battle.”

The Trump administration is now trying to expand domestic rare earth supply chains, sourcing from Australia, Greenland and even within the U.S. But Suderman says it could take two to three years before those efforts meet national defense and economic needs.

What Farmers Need to Know

To many farmers, Washington’s global strategy feels like it’s coming at their expense. While the administration is playing the long game with China, rural America is paying the short-term price. Still, Suderman sees opportunity ahead if the U.S. can continue developing new markets, strengthen biofuel demand and tap into growing trade opportunities in Africa and beyond.

“We weren’t ready to give up China,” he admits, “but we need to look forward not backward.”

Economists Fear Trade War Will Push Agriculture Deeper Into a Recession

Fri, 02 May 2025 17:19:12 GMT

Agricultural economists are growing even more pessimistic as the latest Ag Economists’ Monthly Monitor shows the majority are concerned President Donald Trump’s tough stance on trade could push agriculture deeper into a recession while also giving Brazil more of a competitive edge. As one economist stated, the stakes are high, and the key is whether Trump’s policies push ag deeper into a recession, and if U.S. agriculture can survive without China.

The Ag Economists’ Monthly Monitor is a survey of nearly 70 agriculture economists nationwide. This month, 72% of those surveyed say the row crop side of agriculture is in a recession, up from 62% last month. Eighty-two percent of economists also think this could force more consolidation in agriculture.

Despite Trump’s 90-day pause on tariffs for most countries except China, economists stress agriculture is in peak uncertainty.

Of the 72% who think agriculture is in a recession, their reasons are:

Compressed margins and concern about operating debt carried over from last year.
Prices for most crops have declined more than production expenses since 2022.
Negative returns for at least the third consecutive year across nearly all row crops.

Yet, the 28% who believe the crops side of agriculture isn’t in a recession say:

“Profit opportunities are there, but slim.”
“Economic performance and growth of U.S. ag is slowing and/or stable but not declining. It’s too early for the impacts of tariffs to change ag business decision-making.”
“Given the volatility in the crop session, a recession requires at least two bad return years, where returns include both private market and government payments. We do not know about 2025 yet, nor do we know the extent of government payments for 2024 crops yet and thus what will be the total return for 2024.”

Economic Drivers

In the survey, 42% of economists said the current state of the ag economy is “somewhat worse” than a month ago, while 26% said it’s unchanged. But when you compare outlooks to a year ago, 58% of economists responded the ag economy is somewhat worse.

Ag Economists’ Monthly Monitor

(Lindsey Pound )

Economists were asked to list the two most important factors driving agriculture’s economic health today, as well as in 12 months. Tariffs and trade war topped the list.
“Weather will always be one of the primary factors, but we can add President Trump’s efforts to restructure global trade to that list this year. We’re in worse shape if he fails and better shape if he succeeds. Big stakes,” one economist said.

In addition to tariffs and the trade war, economists also said:

Inflation
Interest rates
Political uncertainty
Consumer demand
Status of trade issues and the supply-side (crop size) of the balance sheets.
The inability of farmers to manage price volatility due to uncertainty around trade

High Stakes with Trade

Agriculture is an export dependent business. According to the Trump administration, when it comes to tariffs and the impact on the overall economy, long-term gain will be worth the short-term pain. However, when it comes to agriculture, the economists surveyed don’t agree.

When ag economists were asked if they think Trump’s strategy of using tariffs as a negotiating tool will benefit U.S. agriculture in the long run:

76% responded no
24% responded yes

April Ag Economists’ Monthly Monitor

(Lindsey Pound)

Since the last trade war, Brazil has gained ground and displaced the U.S. as the top corn exporter in 2023. Economists believe it won’t be the U.S. benefiting from this trade turbulence, but instead these competitors:

Brazil (76% of responses)
China (12% of responses)
India (6% of responses)
Ukraine (6% of responses)

Will Farmers Be Compensated for Short-Term Pain?

As Web reported, Agriculture Secretary Brooke Rollins has stated since winter that if farmers suffer financial pain from the trade war, the Trump administration will look at compensating farmers at some point.

April Ag Economists’ Monthly Monitor

(Lindsey Pound)

Of the economists surveyed, 89% think USDA will compensate farmers with financial payments, similar to what the previous Trump administration did with the Market Facilitation Program Payments (MFP). However, 80% of economists say it’s too early for USDA to be considering compensating farmers for financial fallout.

Bottom line:

The risks are high. Unless the U.S. invests in domestic manufacturing over an extended period, the loss from exports could be a big hit to ag commodities. But if the Trump administration can gain more trade access to key countries, the rewards could be even bigger.

Your Next Read:

92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

Fri, 21 Mar 2025 14:47:57 GMT

President Donald Trump hasn’t been shy about using tariffs as a negotiating tool. As he cracks down on fentanyl and illegal border crossings, he’s also pushing to restore what he calls fairness in U.S. trade relationships and countering non-reciprocal trading arrangements.

The reality for agriculture is the U.S. agricultural trade deficit hit a record in 2024 as imports soared, and Trump says he wants to reverse the trend.

According to the Trump administration, when it comes to tariffs and the impact on the overall economy, long-term gain will be worth the short-term pain. However, when it comes to agriculture, ag economists survyed in the March Ag Economists’ Monthly Monitor don’t agree.

Ninety-two percent of economists think Trump’s strategy of using tariffs as a negotiating tool won’t benefit U.S. agriculture in the long run.

Here are some of those economists’ comments from the most recent Farm Journal Ag Economists’ Monthly Monitor survey.

“Food as a weapon doesn’t have a successful track record, see Jimmy Carter and the 1980s,” responded one economist in the anonymous survey. “It’s not a guarantee as it’s like playing Russian roulette; you might ‘win,’ but the risks are huge.”
“Farm Journal readers should learn about the long-term consequences of Smoot-Hawley. It wasn’t just about the economic costs — it was also about the relational damage between trading partners. I have a hard time believing we will rebuild these relationships any time in the foreseeable future,” another economist said.
“It depends on whether tariffs are used as a negotiating tool with the ultimate goal of reducing trade barriers, or whether they instead result in a world with higher barriers. The president’s emphasis on tariffs as a way to raise revenue suggests tariffs and their consequences may persist,” was another economist’s response in the Monthly Monitor.

However, one economist wasn’t as certain, saying, “For it to be beneficial depends on it being short lived and resulting in trade initiatives with market access or purchase commitments. And in the meantime, action is taken quickly related to Trump’s post to offset trade loss with increased domestic use such as removing dated rules that limit ethanol blends, renewing or creating biofuels production incentives, and adding SAF as a mandated fuel.”

Trade War or No Trade War?
What an overwhelming number of agricultural economists do agree on is that the U.S. is in the midst of another trade war. Ninety-two percent of economists say a trade war is already here, while only 8% responded no.

“I don’t think anyone is arguing with the notion that we are in another ‘trade war,’” one economist said. “This one is far bigger and far more consequential than the last one we were in.”

“It seems more like a trade cold war,” another economist responded. “The situation is ever-changing, and it is hard for buyers, markets and producers to anticipate reality and effect. The threat of tariffs is almost as effective as a tariff.”

As agriculture tries to navigate the turbulence and shocks of another trade war, the ultimate question is: Who wins in a trade war? According to Romel Mostafa, professor of business, economics and public policy for the Ivey Business School in London, Ontario, it’s neither the U.S. or Canada.

“If we think about U.S. and Canada, we both lose,” Mostafa says. “The way our markets are integrated, both from the input side as well as the product side, any tariff really increases cost of production for our farmers all the way to food on the table. What then happens, essentially, some of our products are going to be less competitive in major markets than where we compete. Who then benefits? Perhaps Brazil, Russia or other countries.”

Other agricultural economists agree: If you’re looking at the trade war between the U.S. and Canada or the U.S. and China, it’s not the U.S. who wins, it’s ultimately one of the United States’ biggest competitors: Brazil.

The Ag Economists’ Monthly Monitor asked, “In the next 10 years, which country ultimately benefits the most from the current trade turbulence?” Seventy-three percent of economists think it’s Brazil, and 18% said China.

This Trade War Could Be Worse Than the Last time
Of the agricultural economists surveyed, 69% say they don’t think a trade war today would have the same impact it did 2018 through 2020. Instead, most think it will be worse.

“The trade war in 2018/19 also had the African swine fever in China. Because of ASF, they did not need the soybeans anyway. It will be hard to figure out what impacted the U.S. markets/prices more, but the market reaction should not be as great this time,” said one economist in the monthly survey.

Ag Econoimsts’ Monthly Monitor

(Lindsey Pound)

“It would be a bigger impact,” another economist said. “The first round of trade wars in agriculture were largely used as a wedge for negotiation or renegotiation of agreements that provided improved access and growth opportunities for ag trade. This round seems to be championed based on reshaping the entire trading system, a system that U.S. agriculture largely benefited from over time.”

“There appears to be less willingness by the U.S. taxpayer to provide financial assistance to agricultural producers. That is not to say that financial assistance is absent this go around, but I do believe it increases the uncomfortable situation for producers who largely support less government spending,” one of the respondents shared.

However, other economists think it could have a similar impact, saying the same commodities will be impacted.

Even talk of tariffs is enough to move the markets, as some analysts argue the commodity markets have been ignoring fundamentals, instead trading headlines recently.

The Potential Economic Hit to Ag
The American Farm Bureau (AFBF) economists recently took a deeper dive into the possible impact of reciprocal tariffs. AFBF economists say of the top 20 U.S. agricultural products currently being targeted by Canada, for a total of $5.8 billion, commodities such as juice, coffee and chocolate are hardest hit, along with wine, fresh fruit, dairy products, poultry and rice.

Canada’s retaliatory tariffs

(AFBF)

China’s retaliatory tariffs

(AFBF )

When it comes to China, Beijing has specifically targeted 15 products including beef, cotton, grain sorghum, pork, corn and dairy along with fresh fruit. Economists say while it’s too early to measure the full impact of the tariffs on U.S. agriculture, they believe it will certainly decrease demand for U.S. products in Canada and China.

Market Facilitation Program 2.0?
If agriculture is caught in the middle of another trade war, the March Ag Economists’ Monthly Monitor wanted to know if economists think USDA will compensate farmers for their losses again, similar to what the previous Trump administration did with Market Facilitation Program (MFP) payments.

March Ag Economists’ Monthly Monitor

(Lindsey Pound)

Even though Secretary of Agriculture Brooke Rollins has promised to make farmers whole through another trade war, economists are concerned about available funding. Seventy-seven percent of economists think USDA will compensate farmers, but 23% don’t think so.

“Congress might be the limiting factor,” one economist said.

“They will want to do so, but their ability to do so may be limited. The failure to include replenishment of the Commodity Credit Corporation’s borrowing authority in the continuing resolution limits available CCC funds, and other options may also be limited in potential scope,” another respondent shared.

“The political dynamics appear to be similar,” said another economist. “Amounts are however likely to be less, maybe substantially less, due to the general policy initiative to reduce government spending.”

The Secretary of Agriculture has come out and said they will use these tools if it becomes necessary.

Latin America’s Dairy Exports Likely to Remain in the Region...for Now

Wed, 27 Nov 2024 20:40:13 GMT

The current milk production situation across Latin America is starkly different than what it was at the beginning of this year. In some countries, healthy margins are boosting output, whereas adverse weather has limited output in others, according to Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, an agricultural consulting firm in Buenos Aries.

Of the Latin American milk-producing countries, Mexico is the most crucial to the U.S. dairy industry, and like elsewhere across the region, a shift in output has also started to occur in the United States’ largest dairy market.

“Official government data indicates that Mexico’s milk production continues to move steadily higher, including a 3.1% year-over-year increase in October, but that is in sharp contrast to information being shared by market participants,” Ganley said. “Stakeholders indicate that milk volumes in Mexico have tightened considerably compared to earlier in the year.”

In fact, weakening production in Mexico has pushed milk prices higher, which helps to explain why Mexico’s dairy imports have remained so strong in recent months even as the value of the peso has declined, she said. While a decline in milk and dairy product supplies in Mexico should be good for the U.S. dairy industry, the election of former President Donald Trump as the 47th president of the United States has raised concerns for the U.S. dairy industry.

Trump has threatened to pressure Mexico into curbing illegal immigration into the United States, a crucial issue during the campaign, by levying 25% tariffs on Mexican imports into the United States. And if the border issue persists, he has further threatened to increase those tariffs to 100%.

If Trump follows through on his threat of tariffs, Mexico has already indicated it would retaliate with tariffs of its own. A recent New York Times article noted that about 80% of Mexico’s exports are sent to the United States, while 16% of all U.S. exports go to Mexico. However, Ganley noted that Mexico is a particularly critical market for the U.S. dairy industry, with nearly 30% of all U.S. dairy exports in value terms sent to Mexico last year.

Another large importer of dairy products, Brazil, started the year with strong milk production, but that has since stumbled due to major weather challenges. Ganley noted that lingering effects of flooding in the south of the country compounded by drought and wildfires in the center of Brazil have had a negative impact on milk production. By the third quarter of this year, she said, year-over-year milk production had slipped 0.6%.

“Weaker domestic production in Brazil has kept demand for dairy product imports strong,” Ganley noted. “But most of that demand will be filled by fellow Mercosur members, Argentina and Uruguay.”

South American Milk Production

(Daily Dairy Report)

At the same time, milk production in Latin America’s who largest dairy-exporting countries has shifted from double-digit losses early in the year to being down only slightly in recent months. “At the start of 2024, a difficult macroeconomic environment in Argentina, punctuated by soaring inflation, caused dairy producers to slash production as they attempted to insulate themselves from rising costs. The resulting scarcity of milk combined with moderate operating costs, have driven profits higher, and the resulting strong margins have encouraged dairy producers to expand.”

In Uruguay, the region’s other major exporter, heavy rains took a toll on second-quarter output, but just like in Argentina, strengthening milk prices in the face of lower output have improved producer profitability, Ganley reported, and that has led to a near recovery in output. Most industry analysts expect production in Uruguay to continue to improve.

“However, even if milk production continues to improve among the region’s exporters, milk and dairy products would largely stay confined to the region if demand among Latin America’s importers continues to increase,” Ganley said.

Your Next Read: Trump Vows New Canada, Mexico, China Tariffs That Threaten Global Trade

Market Update: Drought in Brazil Pushes Soybean Contracts Higher

Mon, 23 Sep 2024 20:58:44 GMT

Friday’s Milk Production report, which showed there was more milk in August than expected, had a bearish effect on spot blocks and butter. But while prices dropped, the movement wasn’t dramatic. Spot blocks slipped to $2.2000 per pound, down $0.0375, while butter decreased to $2.9400 per pound, $0.0325 lower. Barrels, NDM and dry whey were unchanged.

Drought in Brazil threatens to delay planting and growing. That raises the potential for an extension of the US soybean export window into February 2025. As a result, soybean contracts jumped higher through 2026. Nearby futures had the biggest increases, with November 2024 and January 2025 contracts settling at $10.3925 and $10.5675, respectively, each up $0.2725.

US corn harvest is moving along, reaching 14% complete as of September 22. That compares to 9% last week and 11% on the five-year average. Soybean farmers are also bringing in crops at a relatively quick pace. Harvest is 13% completed, up from 6% the previous week and the five-year average of 8%.

Ever.Ag - The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.

Uruguay’s Milk Surplus to Look for New Home

Fri, 08 Sep 2023 17:10:59 GMT

Uruguay, a country about the size of Virginia and West Virginia combined, is one of South America’s dairy powerhouses. The country’s dairy industry produces more dairy products than its nearly 3.5 million people consume. While demand from neighboring Brazil is often strong enough to absorb much of Uruguay’s surplus, that’s not true today, which will add to the world surplus, according to Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, an agricultural consulting firm in Buenos Aries.

“For the first half of the year, plentiful milk in Uruguay wouldn’t have been a problem because the country enjoyed exceptionally strong demand for its dairy products from neighboring Brazil,” Ganley said. “But as Brazilian milk production has begun to recover and demand has declined, Uruguay has been scrambling to identify alternative markets for its products.”

Brazil, Argentina, Paraguay, and Uruguay are all part of the Mercosur trading bloc, and as such Uruguay receives preferential tariff treatment from Brazil. Ganley notes that earlier this year, in part because of this advantage, Uruguay’s dairy producers enjoyed dairy commodity prices, especially milk powder prices, that exceeded those in the international market, but that also appears to be ending.

“In response to stubbornly low international prices and waning regional import demand, Uruguay’s dairy processors have announced aggressive milk price cuts in coming months,” Ganley said. “The country’s largest dairy processor and exporter has slashed the price it pays for dairy solids and reduced winter bonuses.”

This processor dropped the August pay price to 36¢ (U.S.) per liter, the equivalent of $15.85/cwt., which is a 21.7% decline from July’s near-record 46¢ per liter. Other processors have also announced price cuts, some even more drastic.

“By dropping milk prices to within a few cents of the cost of production, Uruguayan processors are likely trying to right size supplies before spring fully sets in and they are awash in milk,” she said. “Uruguayan milk production has struggled over the past couple years, but then it turned decisively positive in recent months.”

Milk production in the country was up 6.4% year over year in July, leading to some of largest volumes ever for the month, according to INALE. Uruguay’s recent robust milk prices and healthy margins have played a key role in encouraging production, but that will ease as declining milk prices cut into margins, she said.

As Brazil imports fewer milk products from Uruguay in coming months, the country’s surplus will find its way to other markets and weigh on international markets.

For more on milk prices, read:

Brazil Confirms BSE Case, Halts Exports to China

Thu, 23 Feb 2023 16:27:20 GMT

Brazil’s beef exports to China will be halted starting Thursday after a case of mad cow disease was confirmed in the northern state of Para, the country’s agriculture and livestock ministry said on Wednesday.

The suspension is part of an animal health pact previously agreed between China and Brazil and is expected to be temporary. It is a blow to Brazilian farmers, as China is the main destination for Brazil’s beef exports.

“All measures are being taken immediately at each stage of the investigation and the matter is being handled with total transparency to guarantee Brazilian and global consumers the recognized quality of our meat,” said Minister Carlos Favaro.

A case of the disease, formally called bovine spongiform encephalitis, was confirmed earlier by Para’s agricultural defense agency.

“The symptomatology indicates that it is the atypical form of the disease, which appears spontaneously in nature, causing no risk of dissemination to the herd and to humans,” the agency said in a statement.

The sick animal was on a property with 160 head of cattle in the southeast of the state. The site has been inspected and preventively interdicted, the agency added.

Samples were sent to the World Organization for Animal Health lab in Alberta, Canada, to confirm whether it was the classic form of the disease or its “atypical” version.

In 2021, two cases of the disease triggered a suspension in beef exports to China that lasted more than three months.

First Thing Today: South American Growing Season Off to a Slow Start Amid Adverse Weather

Thu, 12 Nov 2020 04:42:17 GMT

Good morning!

Futures favoring the upside after a choppy overnight session... Corn futures saw two-sided trade overnight and as of 6:30 a.m. CT the market is around a penny higher. Soybeans are narrowly mixed after holding to a narrow, choppy range overnight. Winter wheat futures are 2 to 3 cents higher, while spring wheat is again mixed. The U.S. dollar index is under light pressure, while crude oil futures are posting slight gains.

PF CCI: Corn and bean ratings fall... When USDA’s crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the corn crop the corn crop fell 1.61 points to 357.01 points. Soybean ratings fell 2.24 points over the past week to 346.67 points. Get details here .

Cordonnier leaves crop pegs unchanged... Crop Consultant Dr. Michael Cordonnier made no change to his U.S. corn or soybean yield estimates which stand at 166 bu. per acre and 48 bu. per acre, respectively. He said late-summer heat is helping the corn crop, though maturity still lags. But he adds dryness is a concern for the central Corn Belt for both crops. Soybean development is running pretty lose to normal, so he says further rains will have limited benefit. He has a neutral bias going forward toward both corn and soybeans.

Hot and dry weather delays soybean planting in Brazil... While the soybean-free period has passed in Brazil, Cordonnier reports planting efforts are on hold across central Brazil as temperatures have been in the upper 90s to low 100s and there has been virtually no rain over the past month. Farmers in this region typically like to wait until they receive between 2 and 3 inches of rainfall to insure germination and emergence, he explains. Conditions have also been warm and dry in southern Brazil, and what few fields have been planted there are having germination problems. In his first forecast for 2017-18, Cordonnier estimates soybean acreage will climb 2.5%, but a return to normal yields will result in a 4.3% reduction in crop size to 109 MMT. He expects the Brazilian corn crop to fall both in terms of yields and acreage, resulting in an 88.0 MMT crop for 2017-18, down 10% from the year prior.

Wet weather raising some acreage concerns in Argentina... In stark contrast, Cordonnier reports that wet weather in Buenos Aires and La Pampa has raised concerns that these areas may not dry out in time for normal spring planting, especially for corn. Cordonnier took an initial stab at the Argentine 2017-18 crop size, cautioning that these are just “educated guesses at this point” that will likely change. He pegged the Argentine soybean crop at 55.0 MMT, down 4.8% from year-ago, with the corn crop expected to total 42.0 MMT, up 2.4% from 2016-17.

Stretch of Illinois River closed due to low water. A one-mile stretch of the Illinois River near the La Grange Lock and Dam has been closed after three vessels became grounded in the area due to low water, according to the U.S. Army Corps of Engineers. The area could be closed for several days as a dredging vessel is not expected to arrive until late Wednesday or early Thursday, according to Corps spokeswoman Sue Casseau. There were six downriver-bound and four upriver-bound vessels waiting to pass as of Monday afternoon.

Trump to focus on sovereignty and accountability at his first U.N address... President Donald Trump is expected to stress “sovereignty and accountability” rather than joint action on global crises in his address to the United Nations General Assembly this morning. He is also expected to focus on the Iran nuclear deal and the nuclear standoff with North Korea. In brief remarks on Monday, Trump said the U.N. had grown too bureaucratic and ineffective and should overhaul itself, but gave no clue as to whether he would cut U.S. funding. Trump called for management and budget reform of the U.N., as well as greater burden sharing among its members for peacekeeping duties.

Slow Chinese corn sales could lead to a supply crunch... Concerns about a short-term supply shortage in China have sparked an aseasonal rally in its corn market, as farmers there are changing their marketing patterns due to the elimination of its price support program for the grain. Previously, farmers would sell their corn crop at a minimum price to the government who stockpiled the grain. But now they are paying more attention to price fluctuations and those with storage options are opting to delays sales as they feel prices will be better later. Concerns about a tight supply are heightened by drought early in the season that delayed planting for some areas.

Lighthizer: China an unprecedented threat to trading system... China’s economic model represents an “unprecedented” threat to the world trading system that can’t be addressed under current global rules, U.S. Trade Representative (USTR) Robert Lighthizer said Monday in a speech in Washington. “There is one challenge on the current scene that is substantially more difficult than those faced in the past, and that is China,” he continued. “The sheer scale of their coordinated effort to develop their economy, to subsidize, to create national champions, to force technology transfers and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented.” The World Trade Organization (WTO) and the rules that underlie the international trade arbitrator weren’t designed to deal with China’s current approach to its economy, he said.

NAFTA talks moving at ‘warp speed’... Regarding NAFTA 2.0 talks with Canada and Mexico, whose third meeting to revise the deal will take place from Sept. 23-27 in Ottawa, Lighthizer has said the U.S. is seeking a major overhaul of the deal that will benefit American workers. “We’re moving at warp speed, but we don’t know if we’ll get to a conclusion,” Lighthizer said. He declined to answer questions about the United States’ proposal to add a “sunset” provision to a revised NAFTA deal, which would require the agreement to be terminated after five years unless all three countries agree to continue.

EU to cut import tariffs on Argentine biodiesel tomorrow... The European Union will lower its import duties on biodiesel from Argentina from a range of 22.0% to 25.7% to 4.5% to 8.1% on Wednesday, the bloc confirmed. This comes after the World Trade Organization ruled against the duties. Prior to the tariff hike in 2013, the EU had been Argentina’s top customer, and its return as a buyer is especially timely since the U.S. recently hiked tariffs on the Argentine biofuel.

Friendly cash signals... Early cash signals are promising for another week of gains for the cash cattle market as showlist are down a net 18,000 head, packers continue to enjoy strong profit margins and the boxed beef market posted solid gains to start the week, though movement was fairly light. But negotiations have extended late into the week of late, which could lead to more choppy futures price action, especially since they are already trading at a premium to last week’s average cash price of $105.97.

Cash hog market concerns linger... Some lean hog contracts faced profit-taking to start the week, as traders were unable to sustain early gains above near-term levels of resistance. Plus traders remain concerned that the ongoing slide in the cash hog market limits upside potential for futures. Cash hog bids softened to start the week.

Overnight demand news... South Korea purchased around 69,000 MT of corn to be sourced from optional origins. Japan tendered to buy 127,427 MT of food-quality wheat from the U.S., Canada and Australia in its regular tender. Egypt tendered to buy an unspecified amount of wheat from global suppliers. Jordan made no purchase in its tender to buy 100,000 MT of feed barley.

Today’s reports:

10:00 a.m., Weekly Export Inspections -- AMS
11:00 a.m., Livestock, Dairy, & Poultry Outlook: September 2017 -- ERS
3:00 p.m., Crop Progress -- NASS

First Thing Today: Brazil Already Close to Breaking Soybean Export Record

Thu, 12 Nov 2020 04:42:10 GMT

Good morning!

More pressure overnight... Corn futures are trading low-range and down around 4 cents as of 6:30 a.m. CT as traders respond to USDA’s higher-than-expected crop condition rating. Soybeans are down 4 to 5 cents amid favorable weather forecasts and ongoing unease about trade relations with China. Wheat futures are roughly 3 to 6 cents lower, with spring wheat harvest moving toward half complete. The U.S. dollar index is moderately higher, while crude oil futures are posting slight losses.

Slight improvement in corn and soybean ratings... When USDA’s crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale, with 500 being perfect), the corn crop climbed 2.68 points to 360.17 points. Ratings climbed in the major “I states.” The soybean CCI rose 0.80 points to 349.16 points, with steady to higher ratings in most Midwest states helping to offset a decline in Iowa. Get more details .

Cordonnier feeling a bit more optimistic about crop prospects... Crop Consultant Dr. Michael Cordonnier maintained his national average corn yield estimate of 163.5 bu. per acre, noting that beneficial rains fell in Iowa and the Dakotas in recent days and Iowa is slated to receive more rain later this week. But he also noted that he thinks USDA is too optimistic with its 169.5 bu. per acre yield peg and that a lower figure is likely for September. Cordonnier also maintained his soybean yield estimate at 46.5 bu. per acre, again noting beneficial rains for the western Corn Belt and especially Iowa. He now has a neutral bias toward both corn and soybeans and says that if this week’s rainfall is heavy and widespread in areas that need it most, he may increase both crop pegs.

NOPA expected to report an uptick in crush from June... Members of the National Oilseed Processors Association (NOPA) will likely report they crushed 143.004 million bu. in July, according to analysts surveyed by Reuters. This would be a decline from July 2016 when NOPA members crushed 143.715 million bushels but up 4.93 million bushels from June. Soyoil stocks at the end of July are expected to come in around 1.623 billion lbs., down from 1.703 billion lbs. at the end of June.

Brazil already close to breaking bean export record... Brazil has sold 53.37 MMT of soybeans for export through the second week of August, already topping 2016’s total exports by 3.5%, according to preliminary data from the country’s development ministry. This also signals Brazil should have no trouble breaking its 2015 soybean export record of 54.3 MMT. Brazil’s oilseed industry association expects the country to export 64 MMT of beans this calendar year.

Preliminary dumping decision in Argentine, Indonesian biodiesel case delayed...Commerce Department officials will wait a little longer in deciding whether producers/exporters from Argentina and Indonesia are dumping biodiesel in the U.S. market. Commerce extended the deadline for issuing a preliminary determination from Aug. 30 to no later than Oct. 19 at the request of the National Biodiesel Board Fair Trade Coalition and its members — petitioners in the probe as well as a companion subsidy case. The investigations could result in duties on the investigated imports, but that outcome is not assured. The U.S. imported $1.6 billion of biodiesel from the two countries in 2016. While the coalition filed for extensions for both the anti-dumping and subsidy cases, the extension only applies to the dumping case. Preliminary decisions in the subsidy cases are on track for Aug. 22.

Fed’s Dudley favors another rate rise this year... Federal Reserve Bank of New York President William Dudley said it isn’t unreasonable to expect an announcement on how the Federal Reserve plans to reduce its $4.5-trillion balance sheet in September, adding that he would be in favor of another rate hike this year if the economy holds up. Dudley also weighed in on the race for the position of Fed chair, saying former Goldman Sachs Group Inc. executive and White House economic adviser Gary Cohn was a “reasonable candidate” for the job. Minutes from the July policy meeting, which may give some hint as to the FOMC’s plans, will be published tomorrow.

India will challenge any U.S. action in WTO poultry dispute... Indian trade officials are prepared to challenge any U.S. effort at the World Trade Organization (WTO) to impose trade sanctions on New Delhi over the poultry dispute between the two countries. The topic could be decided on Aug. 19 at the WTO headquarters in Geneva, where India plans to block the U.S.'s retaliatory action. The WTO is considering a U.S. request to sanction $450 million in annual retaliatory trade measures against India until it complies with a 2015 ruling. India and some other WTO members are concerned that Washington’s request for retaliation before seeking a compliance investigation does not adhere to the proper sequencing of the WTO dispute process.

Traders may have factored in too big of a cash price drop... While traders have a negative bias toward this week’s cash cattle prospects, the $6-plus discount the August contract holds to last week’s action that took place at an average price of $115.17 is likely overdone. Showlist estimates are up 11,000 head this week, as gains in Nebraska more than offset reductions elsewhere. Boxed beef prices were mixed to start the week.

Strong hog slaughter numbers to start the week... Pork movement was lackluster to start the week on a 7-cent decline in the pork cutout value. With supplies expected to build heading into fall, pork movement and slaughter numbers take on added importance. On a more positive note, Monday’s kill of 446,000 head was up 18,000 head from year-ago levels.

Overnight demand news... Jordan’s issued an international tender to buy 100,000 MT of barley.

Today’s reports:

2:00 p.m., Feed Grains Yearbook tables -- ERS
2:00 p.m., Turkey Hatchery -- NASS

First Thing Today: Infrastructure, Waterways Focus for President Trump

Thu, 12 Nov 2020 04:37:56 GMT

Followthrough buying overnight... Corn futures enjoyed followthrough buying overnight and the market is up 2 to 3 cents as of 6:30 a.m. CT. Soybeans are 4 cents higher. Winter wheat futures are up 4 to 5 cents, while spring wheat is currently trading mixed, as early gains and the move above $6.00 for several contacts triggered profit-taking. The U.S. dollar index is higher today, while crude oil futures are down slightly.

Infrastructure, waterways focus for President Trump... President Donald Trump will deliver remarks on infrastructure with a specific focus on U.S. waterways in an appearance in Cincinnati. The remarks are part of the focus this week the White House has put on infrastructure. In the appearance, Trump will highlight some additional portions of the plan that includes federal grants to rural areas as well as to states and localities to create additional funding for projects. Given the backdrop of a barge behind him at the Port of Cincinnati, Trump is expected to talk about the thousands of miles of waterways used to move an array of products into export locations and to other users.

Lingering U.S./Mexico sugar issues but agreement in principle announced... Top officials from both countries on Tuesday announced a tentative accord. But the American Sugar Alliance has some concerns about a “major loophole” dealing with additional U.S. needs. Alliance spokesman Phillip Hayes said, “Mexico could exploit this loophole to continue to dump subsidized sugar into the U.S. market and short U.S. refineries of raw sugar inputs.” Hayes said the U.S. sugar industry wanted to work with Commerce Sec. Wilbur Ross on the provision that gives Mexico the right of first refusal to fill 100% of any additional sugar USDA determines is necessary to meet commercial demand for sugar that is used for everything from candy to beverages and processed foods. The agreement will be finalized over several days, but removes one contentious issue from the table when the U.S., Mexico and Canada begin formal talks to renegotiate the North American Free Trade Agreement.

U.S. corn industry applauds sugar accord with Mexico... John Bode, president and CEO of the Corn Refiners Association, said the agreement once finalized would protect a $500-million-a-year market in Mexico for his industry. The National Corn Growers Association also welcomed the agreement, noting that Mexico is the top export market for U.S. corn overall.

Trial that could oust Brazil’s Temer begins... A trial began Tuesday in Brazil’s Superior Electoral Court that could unseat President Michel Temer. He has been accused of involvement in illegal campaign financing during the 2014 presidential election, when Temer was a running mate to the eventual victor, Dilma Rousseff. Rousseff was since been impeached and suspended, putting Temer in charge. If the court finds that Temer was responsible for illegal fundraising of the votes he received in 2014, he would be suspended and replaced by someone who would serve the rest of the term through December 2018. The president is also dealing with allegations he condoned bribes paid as hush money for corruption cases involving his government. Temer has rejected calls for him to resign.

South Korea again dealing with bird flu... South Korea raised its bird flu alert status to its highest level on Monday after the first bird flu case since early April was detected. Since then, the country’s ag minister has ordered the cull of 186,000 farm birds to prevent the spread of bird flu as more cases of highly pathogenic H5N8 avian flu were confirmed. Since the outbreak first began in November 2016, around 38 million birds have been killed, representing more than a fifth of the country’s total poultry population, reports Ag Ministry Spokesman Lee Ju-meung. Lee also noted that a mass culling was unlikely in this latest flare up as the new cases have mostly been on small farms and the virus does not typically spread as fast during the summer.

JBS sells Argentine operations to Minerva... JBS SA has agreed to sell its Argentine operations, as well as its operations in Paraguay and Uruguay to Minerva SA, a smaller rival. The $300-million deal that is expected to close next month will be used to pay off debt. This comes as JBS’s parent company J&K Investimentos made a deal with federal prosecutors and agreed to pay a $10.3 billion real ($3.1 billion) fine for its role in crimes committed by the Batista family that controls the group.

Bearish reversals could lead to followthrough selling in cattle... A number of live cattle contracts posted bearish reversals Tuesday, setting the stage for followthrough selling today. And limits are expanded in the feeder cattle market. But while futures faced heavy selling yesterday, technical damage was limited. Today traders will zero in on the results of the online Fed Cattle Exchange Auction. Last week, sales took place at an average top price of $132.17, which eventually led to active trade on the Plains that averaged around $136.

Cash hog strength continues... Cash hog bids strengthened again across the Midwest on Tuesday, which makes traders comfortable with the June contract at a premium to the cash hog index. But the fact that the July and August contracts are below June futures signals traders expect cash prices to top out this month. Meanwhile, pork movement improved Tuesday after a light start to the week.

Overnight demand news... Taiwan tendered to buy 92,400 MT of milling wheat from the United States. Japan will buy 14,010 MT of feed wheat in its simultaneous buy and sell auction.

Today’s reports:

9:30 a.m., Weekly Ethanol Production -- EIA
9:00 a.m., Milk Cost of Production -- ERS
2:00 p.m., Broiler Hatchery -- NASS

First Thing Today: Brazilian Soybean Shipments Surge

Thu, 12 Nov 2020 04:37:56 GMT

Grain and soybean futures higher overnight... Corn futures are around a penny higher and soybeans are up fractionally to 2 cents after both markets favored the upside overnight. Wheat futures are also higher, with most contracts posting gains between 1 and 2 cents. The U.S. dollar index is slightly lower, while crude oil futures are posting solid losses.

Export sales report expectations... USDA will release its weekly update on export sales activity at 7: 30 a.m. CT. Traders expect the report to show corn sales ranging from 600,000 MT to 1.1 MMT, soybean sales between 200,000 MT and 550,000 MT, wheat sales of 250,000 MT to 650,000 MT, soymeal sales ranging from 50,000 MT to 250,000 MT and soyoil sales between 5,000 MT and 42,000 MT.

Brazilian soybean shipments surge... The corruption scandal in Brazil caused the real to tumble against the U.S. dollar, making Brazilian soybean shipments more competitive and raising prices for farmers. Plus storage has increasingly been an issue. As a result, farmer sales have surged, helping Brazilian soybean shipments to catch up with year-ago. Through May 23, Brazil has shipped 6.85 MMT of soybeans (versus 6.79 MMT last year) and Williams shipping data shows another 3.5 MMT of soybeans are scheduled to depart this month. This month’s shipments are expected to top May 2016 by nearly 2 MMT. And shipments are expected to remain strong given record production and fast selling

Thune releases another farm bill measure... Senate Agriculture Committee member John Thune (R-S.D.) has released more farm bill language, this time targeting changes to Title I crop support payments. The bill would require that Agriculture Risk Coverage-County payments be based on where the land is located and not on the administrative county for the farm and require base allocation for crop support payments to be based on planted acres from 2014-2017 instead of the historical acreage currently used. Under the current base allocation system, farms that have not planted commodity crops in years could still get crop-support payments because of the reliance on old data, Thune said, adding that the changes are “good government provisions” that could result in millions of dollars in savings.

Crushing margins slip as soymeal stocks rise to highest level in nearly five years... China’s crushing margins for soybeans dropped to a nine-month low this week, which helped push soymeal stocks to their highest level since August 2012. Soymeal prices hit their lowest level in a year. In Shandong province, a key crushing area, soy processors are losing 261 yuan ($37.98) per metric ton. Demand for soymeal is week. Liang Yong, an analyst with Galaxy futures, explains, “poultry farms are losing money and restocking of hogs is slow due to falling profits.” Crush margins are expected to remains low for at least a couple of months as sluggish demand for soymeal and large edible oils supplies are expected to continue.

Mexican sugar association asks for antidumping investigation into U.S. fructose... Last week, CNIAA, Mexico’s sugar industry association, submitted a request to the economy ministry, asking the government to investigate suspected dumping of high fructose corn syrup (HFCS) by the United States. Whereas Mexican sugar headed to the U.S. is subject to tariffs, HFCS enters Mexico tariff-free. Mexico is expected to target the sweetener if it cannot reach an agreement with the U.S. regarding a long-running sugar trade spat by June 5.

Ag consultancy cuts Russian grain crop estimate... SovEcon slashed its estimate of Russia’s grain crop by 3 MMT to 106.5 MMT. It details that the wheat crop will likely total 63 MMT, which is a 500,000-MT increase from its March estimate.

Russia/Turkey trade dispute flares back up... Yesterday, reports circulated that Turkey has introduced new limits, restricting wheat imports from Russia to about 20% to 25% of total imports. While Turkey’s economy ministry denied these reports and said that Turkey remains committed to the agreements it signed recently with Russia. But some traders are struggling to get licenses, according to Andrey Sizov Jr., managing director at SovEcon. Traders note the informal restrictions are due to Russia not following through on lifting restrictions on Turkish products, such as on Turkish tomatoes. Corn and sunflower oil have also reportedly been impacted by the latest restrictions.

Lower cash cattle trade begins... Cash cattle traded at a weighted average price of $132.54 for one to nine-day delivery at the online Fed Cattle Exchange auction yesterday, which was a drop of $2.62 from the week prior for the same delivery period. This paved the way for some light cash cattle trade in Texas and Kansas at $132, down $1 to $2 from the bulk of trade the week prior. Active trade is expected at similar price levels, which is roughly $10 above where June futures are trading.

Cash and product prices slip Wednesday, but trend remains higher... The pork cutout value fell 63 cents yesterday as all cuts except loins and butts softened. Cash hog bids also softened as needs are reduced due to Memorial Day downtime. However, traders expect cash bids to renew their uptrend after the holiday as supplies tighten seasonally. Therefore, they are comfortable with nearby futures at a premium to the cash index. The nine-day relative strength index signals the market is mildly overbought, but momentum is clearly in bulls’ favor.

Overnight demand news... Jordan tendered to buy 100,000 MT of hard milling wheat from optional origins. South Korea purchased 63,000 MT of feed wheat from optional origins, but it will likely be sourced from the Black Sea region.

Today’s reports:

7:30 a.m., Weekly Export Sales -- FAS
7:30 a.m., Drought Monitor -- USDA/NWS
8:00 a.m., Food Price Outlook -- ERS
2:00 p.m., Outlook for U.S. Agricultural Trade -- ERS
2:00 p.m., Livestock Slaughter -- NASS
2:00 p.m., Poultry Slaughter -- NASS