South America Remains KeySouth America is still a prime factor in today’s price discovery process. The most attention right now is on the harvest that is still taking place in Brazil and Argentina.
While sometimes overlooked, the trade is also focusing on the crops in Paraguay and Uruguay as they are critical in the overall South American commodity supply as well. While production in these countries is much less than in Brazil and Argentina, it will be needed to cover demand if those countries produce smaller crops than initially predicted. They may also be needed if Brazil oversells its production such as it did last year.
The most uncertainty in South America is on the size of the Brazilian safrinha crop. Many firms have reduced their projections on this crop, lowering Brazil’s overall corn crop forecast.
The official estimate of the crop from CONAB, Brazil’s version of the USDA, is at 106.4 million metric tons. The USDA believes the crop will be smaller at 102 million metric tons. Some forecasts are considerably lower, though, and...