54 Follow us on Twitter: @PrairieFarming Better Farming | March 2024 Brazil’s biggest soybean and corn producing state of Mato Grosso was impacted by drought as the soybean crops there matured early due to dryness and plant shutdown, which led to the earliest-ever harvest in many parts for the early planted crops. Yield readings of the early planted and harvested crops were sharply lower by as much as 40 to 50 per cent reduction in yields. According to market estimates, 40 to 50 per cent of Mato Grosso’s soybeans were planted early, and Mato Grosso accounts for about 35 per cent of Brazil’s total soybean crop. When looking at U.S. soybean export demand, China remains missing in action. In fact, China – the biggest buyer of soybeans globally – saw their total soybean imports increase by 11.4 per cent Y/Y in 2023 to 99.41 MMT. But it was Brazil that won the lion’s share of that business since a record Brazilian crop last year afforded cheaper prices for Chinese importers to buy. Due to China’s aggressive hog herd expansion at their newer organized and mechanized farms, their demand for soymeal feed was expected to soar last year. Hence, a large part of the increased imports of soybeans was to cater to this increased soymeal demand. But in November 2023, China’s hog herd shrunk on account of aggressive hog slaughter due to low profits, high costs and outbreaks of African swine fever and other diseases. Besides a governmental focus to persuade farmers to switch to low-protein feed formulas by citing food security measures, a shrinking hog herd could weigh on China’s soymeal demand this year. China’s soybean crush margins had been dropping hard during the first few weeks of 2024, indicating a likely softening of demand. From an investment and hedge fund perspective, commodities started the year out of favour and cheap versus stocks, as speculative fund flows have been chasing money markets (with U.S. five per cent, no-risk, interest rates), bitcoin (which climbed by +173 per cent in 2023) and artificial intelligence through company stocks like Nvidia (+232 per cent in 2023). Grain and oilseed markets have been dead since July of last year with a lack of volume, and the USDA did not do the market bulls any favours. With a lack of news, markets could bleed lower. Everyone has turned bearish, and when the funds are as short as they are (there have been only a couple of times in the past 20 years when they were as bearish), that’s when markets can quickly turn around with a short covering rally and climb higher. BF @CABEFscholarship cabef.org CABEF is a registered charity (#828593731RR0001). For more information on all registered charities in Canada under the Income Tax Act, please visit Canada Revenue Agency www.cra-arc.gc.ca/charities. Want to help support the next generation of agri-food leaders? Become a “Champion of CABEF.” This program allows your organization to directly sponsor a deserving student. Contact CABEF at info@cabef.org. Canadian agriculture and food needs more talented people. Each year, CABEF helps students to pursue rewarding agri-food careers through seven $2,500 scholarships. We’re looking for the future leaders who will help this industry meet tomorrow’s challenges. Do you know someone who needs to fund their future in agri-food? Tell a student today. Scholarship application deadline is April 30, 2024 Moe’s Market Minute MOE AGOSTINO & ABHINESH GOPAL Maurizio (“Moe”) is chief commodity strategist with Farms.com Risk Management and Abhinesh is head of commodity research.
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