Brazil crop uncertainty boosts corn market

Commercial buyers struggle to find old crop supplies of soy

This winter wheat field is still growing in May 2021, but more than 100,000 acres were taken out of production, likely to be put into soybeans or corn in Ontario.

Compared to last year, Ontario farmers will increase soybean acres by two per cent and corn acres will be up 1.7 per cent, according to Statistics Canada.

Ontario farmers are increasing row crop acres at the expense of spring wheat, oats and barley. As of May 4, about 12 per cent of the Ontario corn crop was in the ground. Farmers had planted nearly six per cent of the soybean crop.

Quick look
Soybeans: Ontario market trading at a premium to the world market.
Corn: Demand from the U.K. and Ireland keeping corn price up in Ontario.
Wheat: More than 100,000 acres of winter wheat taken out of production in Ontario this spring.

During the past 30 days, most of the Ontario growing region had received 60 to 85 per cent of normal precipitation with the area just north of Toronto experiencing 85 to 115 per cent of average. During this same time, the province has experienced average temperatures.

Most of the soybean and corn crops will be planted during the second and third weeks of May given the current weather forecast. 

The corn market has incorporated a risk premium due to the uncertainty in production in the United States and Brazil. Private analysts have cut Brazilian corn production by seven to 12 million tonnes compared to last month.

Harvest delays in Argentina have also contributed to the recent strength on the world corn market.

Canada and the U.S. will have historically tight soybean stocks at the end of the 2020-21 crop year. The U.S. Northern Plains are in a drought; Illinois, Wisconsin, Iowa and Ohio are also on the drier side and timely rains are needed.

American and Canadian farmers’ soybean sales have dried up for the time being so there is limited resistance on the market. Commercials are struggling to source supplies. 

As of May 2, U.S. farmers had planted 24 per cent of the soybeans, which compares to 21 per cent last year and the five-year average of 11 per cent.

Approximately 46 per cent of the corn was planted as of May 2, compared to last year’s pace of 48 per cent and the five-year average of 36 per cent.

The Argentine soybean harvest is 33 per cent complete compared to the average pace of 56 per cent. Argentinean farmers have combined nearly 20 per cent of the corn, which is down 11 per cent from the average pace.

The Brazilian soybean harvest is approximately 95 per cent complete.

Ukrainians have seeded 20 per cent of the corn crop in that country. 

The Canadian dollar continues to climb, reaching 81.43 U.S. cents at the end of April.

Canadian first-quarter gross domestic product came in at 6.5 per cent, edging U.S. growth of 6.4 per cent.

At its monthly meeting, the Bank of Canada announced that it will taper its bond buying by $1 billion per week to $3 billion per week starting April 26. This has given the Canadian dollar a bullish shot of adrenaline against the U.S. greenback.

It appears we are heading into a commodity or resource boom unlike we have ever seen. Twelve months from now, our Canadian dollar could be on par with our southern neighbour (the U.S. not Mexico). 


Ontario farmers are expected to plant 2.908 million acres of soybeans this spring, up two per cent or 58,000 acres from the 2020 planted area of 2.850 million acres.

Using a five-year average yield of 47.5 bushels per acre, we’re forecasting Ontario soybean production to reach 4.120 million tonnes, up from last year’s output of 3.91 million tonnes and up from the five-year average of 3.808 million tonnes. We continue to project a historically tight carryout for the 2020-21 crop year.

The domestic Canadian market continues to trade at a premium to world values, which is curbing offshore movement.

Domestic crush margins remain favourable, which is keeping the local bids well supported. Ontario and Northern U.S. soybean elevator bids are at comparable prices so we’re not seeing major trade occur in one direction or the other. 

The soybean market is in a unique situation. We’re hearing that there were possibly six cargoes of Brazilian soybeans traded into the U.S. The U.S. domestic market is not only rationing demand but prices are now at levels to attract imports. The Brazilian crop estimate remains at 136 million tonnes, up 7.5 million tonnes from last year.

The Argentinian crop is projected to finish near 43 million tonnes, down from the April estimate by the U.S. Department of Agriculture of 47.5 million tonnes and down from 48.8 million tonnes last year. We’re forecasting U.S. soybean production to reach 118.5 million tonnes this year, up from 2020 output of 112.5 million tonnes. 

The soybean market is expected to hold value through May. Farmer selling tends to increase after planting, which will weigh on local prices during June. Unless we have a major weather problem in the Midwest, the soybean market will likely come under pressure. Farmers are not going to be aggressive on new crop until harvest is well underway. 

What to do: We’ve advised producers to be 100 per cent sold on old crop and 20 per cent sold on new crop. The Ontario market is being held up by domestic demand. Keep in mind that crushers usually shut down during the summer for upgrades and maintenance. During July, Ontario export and domestic demand will be minimal. This will result in lower prices.


According to Statistics Canada, Ontario farmers are expected to plant 2.229 million acres of corn this spring, up 1.7 per cent or 38,000 acres from the 2020 planted area of 2.191 million acres. Using a five-year average yield of 162 bu. per acre, production has the potential to come in at nine million tonnes, up from 8.9 million tonnes last year and up from the five-year average crop size of 8.7 million tonnes. 

At the time of writing this article, elevator bids for offshore movement and domestic demand were higher than bids from ethanol processors. Ontario cattle-on-feed inventories are at seasonal highs. Domestic feed demand tends to peak in May and then start to subside in June. 

A resumption in corn exports has contributed to recent price strength. Canadian crop year-to-date exports for the week ending April 25 were 823,100 tonnes, up from a meagre 20,900 tonnes last year. Ongoing demand from Ireland and the United Kingdom are expected to keep Ontario corn prices well supported. 

Adverse weather conditions in Brazil are contributing to the strength on the world market. We’re hearing of significant yield drag on the safrinha corn crop due to limited precipitation during the past couple weeks. It’s been hot and dry while the crop is moving through the key pollination stage. We’ve also mentioned that the Midwest was on the drier side with North Dakota in a severe drought. U.S. stocks are going to be historically tight at the end of the 2021-22 crop year and the market cannot afford a crop problem. 

What to do: This week, we’re advising producers to sell the final 20 per cent of the 2020 production bringing total sales to 100 per cent.

Three factors will result in lower prices moving forward. First, the U.S. hard red winter wheat crop will be up five to six million tonnes from last year. There will be widespread wheat feeding in the U.S Southern Plains. This will result in sharply lower U.S. domestic feed demand.

The Brazil corn harvest will begin in late June. This will weigh on export values and take the U.S. out of the picture.

Finally, there is a sharp inverse between old and new crop prices. Once the U.S. farmer is finished planting, we’re going to see significant farmer selling in the U.S. 


Winter wheat remaining in Ontario was lower than expected on the recent Statistics Canada acreage survey. There were 141,000 acres taken out of production. In a normal year, winter wheat remaining in the spring is only down 50,000 to 60,000 acres. Winter wheat remaining came in at 982,000 acres, down from 1.037 million acres last year. Using a five-year average yield of 83.6 bu. per acre, production has the potential to reach 2.2 million tonnes, down from 2.3 million tonnes last year. 

At the time of writing this article, Ontario soft red winter wheat prices were hovering just below $9 per bu. Prices rallied $1 per bu. over the past couple of weeks for three main reasons. Strength in the corn market has spilled over into the wheat complex. We’ve mentioned in previous issues that wheat is moving into feed channels in all major feeding areas of the world.

Secondly, most of Western Canada has received less than 40 per cent of normal precipitation over the past 60 days. North Dakota produces about 40 per cent of the U.S. spring wheat crop and conditions are very dry. Germination is poor. 

Russia and the Ukraine winter wheat crops are in great shape and a year-over-year increase in production is expected. We’re going to see U.S. hard red winter wheat trade into domestic feed channels and Russian wheat will trade into Central and South American milling channels. The European crop will also be up sharply from last year. The Northern Hemisphere winter wheat crop begins in the U.S. Southern Plains during June and is followed by Europe, Russia and Ukraine in July. There is no shortage of winter wheat. 

What to do: We’ve advised Ontario farmers to be 80 per cent sold on their 2020 production. This week, we’re advising producers to sell their final 20 per cent increment bringing total sales to 100 per cent.

About the author

Markets Analyst

Jerry Klassen

Jerry Klassen is the manager of Canadian operations for Swiss-based grain trading house GAP SA Grains & Products.



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