In the Market

Brazilian crop estimates
Conab, Brazil’s government supply agency, estimates the country’s 2016-17 soybean crop at a record 102.45 MMT, a gain of 7 percent from the year prior. It also expects a 7-percent year-over-year rise in the nation’s summer corn crop to 27.7 MMT. Meanwhile, a U.S. Department of Agriculture (USDA) ag attaché in Brazil maintained its 2016-17 soybean production forecast of 101 MMT, citing an increase in acreage and yield from year-ago. This crop estimate is 1 MMT below USDA’s official peg. The attaché expects Brazil to export 57 MMT of soybeans this marketing year thanks to strong demand from China.

Forward sales of Brazilian soybeans lag behind the norm. Brazilian farmers have forward-sold 28 percent of their 2016-17 soybean crop as of Dec. 2, according to Safras & Mercado, a crop analyst in the country. This is well behind last year when farmers had forward-sold 46 percent of their crop and the five-year average for farmers to be 34 percent sold at this point.

Bean crop below year-ago
USDA’s ag attaché in Argentina reports that heavy rains abated and growing conditions improved in mid-November, allowing producers to reactivate their soybean planting efforts. Therefore, the post maintained its production estimate of 55 MMT for 2016-17, which is 2 MMT below USDA’s official crop peg and 1.8 MMT below the post’s estimate for 2015-16. Traders expect USDA to trim its 2016-17 crop peg for the country slightly Dec. 9 to 56.62 MMT.

China’s imports and exports
China’s imports grew 6.7 percent in November compared to year-ago, marking the highest figure since September 2014 and easily topping expectations for a 1.3-percent rise last month. Strong commodity buying, especially of iron ore, coal and soybeans, was behind the surge. Imports of all three are on pace to set a record this year. Last month, the country brought in 7.84 MMT of soybeans, up 2.61 MMT from October. Exports climbed 0.1 percent from year-ago, whereas the market had expected a 5-percent drop. That left the country with a $44.61 billion trade surplus in November, according to the General Administration of Customs. This was below expectations for a surplus of $46.3 billion and October’s $49.06 billion surplus.

Global food prices lower
The Food and Agriculture Organization (FAO) Food Price Index dipped 0.4 points in November from the month prior to 171.3 points. This tick lower was an anomaly, as food prices have steadily risen since the start of the year. A plunge in sugar prices more than offset a strong rebound in vegetable oils prices, resulting in the slight decline, according to FAO. The organization also raised its 2016 global wheat production forecast by 2.6 MMT to 749 MMT, which is up 14 MMT from 2015. “This latest revision mostly reflects improved yield prospects for the Islamic Republic of Iran and Kazakhstan,” FAO said.

Odds of La Nina smaller
The Australian Bureau of Meteorology has lowered the risk of La Nina from 50 percent in July to “inactive,” noting an easing of associated climate indicators. This system is associated with flooding and tropical cyclones along the country’s east coast. The bureau does acknowledge that “La Nina-like conditions” brought record rainfall to the country’s east coast from May to September, which helped wheat farmers.

JBS to hold IPO in U.S.
Brazil’s JBS SA, the world’s largest beef processor, plans to launch shares of JBS Foods International B.V. in the U.S. the first half of 2017. The company did not give details about how many shares it would offer and at what price, though it said it would hold a call with investors and analysts Dec. 8. The initial public offering is part of a broader effort to reorganize the company. Under the plan, the unit based in the Netherlands would be in charge of managing the company’s international operations, while the parent company, JBS SA, would maintain control of beef operations in Brazil.

U.S., Chinese talks falter
U.S. and Chinese trade officials were unable to resolve their disagreements over the Obama administration’s allegations that Beijing provided more than $100 billion in “illegal” government subsidies for producing rice, wheat and corn. The U.S. now plans to ask the World Trade Organization (WTO) to initiate an investigation into the matter at a Dec. 16 meeting of the WTO’s dispute settlement body. The U.S. will argue that China violated the terms of its 2001 accession agreement to the WTO and provided trade-distorting domestic support in excess of its WTO commitments, the Office of the U.S. Trade Representative said. If the U.S. succeeds, the dispute could force China to reduce its agricultural subsidies or face retaliatory trade tariffs worth tens of billions of dollars.

Cotton futures hiked
The week ending Nov. 29, speculators hiked their bullish position in cotton futures to the highest level on record (public record-keeping began in 2006.). Speculators extended their long position by 744 lots to 101,392 lots, according to Commodity Futures Trade Commission data.