December is almost here, so for most of us that means an end to fieldwork for the season. But south of the equator, peak growing season is underway. While it is still early in the South American growing season, there are several market factors farmers will need to watch in the coming weeks that could potentially influence prices here in the U.S.
Why do we watch South America so closely?
Since they are located in the Southern Hemisphere, Brazil and Argentina’s growing seasons are on the opposite side of the calendar from U.S. farmers, which is why both countries have been generating so many market headlines lately. And their large production capabilities make their prices competitive with U.S. corn and soybean pricing.
To be more specific:
Brazil and Argentina combine to produce 49% of the world’s corn exports
Brazil ships 49% of the world’s soybeans
Argentina and Brazil combine to ship 65% of the world’s soymeal exports
In comparison, the U.S ships:
26% of the world’s corn exports
28% of the world’s soybean exports
20% of the world’s soymeal exports
Because Brazil lacks storage capacity for its corn and soybean crops, supplies flood the market at harvest and push international prices lower until they are shipped out. This dynamic creates a price disadvantage for U.S. farmers waiting to capture price opportunities with on-farm storage.
In recent years, the U.S. has become more of a secondary global corn and soybean provider, stepping in to satiate global demand when Brazil or Argentina has issues shipping out their crops. For example, U.S. soymeal exports soared to record highs this past fall after Argentina ran out of soybeans to crush due to its drought last season.