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South American weather, quality issues could extend rally in grain markets

South America could soon add more fuel to the recent rally in grain prices.

Market analyst Michael Cordonnier with Soybean and Corn Advisor says there’s momentum from President Trump’s announcement that China plans to up its commitment of U.S. soybean purchases.

“That’s been the impetus for the price increase for soybeans. But now the market is paying attention to the dryness in Argentina, and just most recently the quality issues for soybeans out in Mato Grosso.”

He tells Brownfield with Brazilian soybean harvest progress around 16 percent, there are reports of poor seed quality in the north.

“Due to excessive rainfall. Some of those areas in Mato Grosso had over 20 inches of rainfall in January, and the farmers have struggled to get the soybeans harvested.”

Cordonnier says as much as 30 percent of the soybeans being harvested are moldy, broken, shriveled, and high moisture.

“And some farmers are saying the grain elevator won’t take it, it’s not quality enough to send for export.”

He says the Mato Grosso Institute of Agriculture announced it is considering reducing its latest soybean production estimate.