Watching This Week: Brazil Corn, Turkey Chicken Demand, And Vietnam Coffee Exports

TRADE-COMMODITIES

Brazil’s Bumper Corn Crop May Spoil US Export Party:

Cheap US corn has attracted international demand in 2017. US corn exports are up 16% year-to-date, but demand has been uneven from the country’s top two buyers—Japan and Mexico. Japan has imported year-to-date 22% more corn compared to the same time period a year ago. Mexico’s purchases have dipped slightly over the same period. Brazil’s corn exports should ramp sharply in the second-half of 2017 after the trucker strike is resolved. Mexico could shift more corn purchases to Brazil if a NAFTA showdown occurs. Given Brazil’s larger corn harvest this season, the country can also build on its success in Japan. Brazil captured 30% of Japan’s corn imports for the first time last season. Traders and grain handlers should definitely keep a close eye on trade indicators in Gro.

FOOD & BEVERAGE

Turkey’s Growing Taste for Chicken Spurs Feed Demand:

Turkey’s chicken meat consumption is projected to grow by 3% in 2017. Chicken meat prices have rallied hard since late 2016, despite increased domestic chicken production. We see positive demand trends developing through 2017 driving the need for more animal feed. As a result, Turkey’s feed use of corn is projected to rise by roughly 4% in 2017. USDA’s upbeat view of Turkey’s wheat conditions on Wednesday is music to the ears of the country’s millers. Still, the country’s poultry industry is greatly dependent on corn imports from Black Sea producers. We expect Russia will battle to recapture share this season after normalizing grain trading relations with Turkey in May.

SOFT COMMODITIES

Vietnam’s Plunging Coffee Exports Lift Robusta Prices:

Global coffee importers are well supplied at the moment. Increased production from Colombia, Ethiopia, Honduras, Indonesia, Peru, and Uganda boosted world coffee exports 8.8% year-over-year. Yet, Robusta prices are moving against the tide. The robusta composite price climbed 3.7% in June on concerns that robusta exports may slow from Vietnam, the world’s second largest producer. Indeed, the country’s June exports dropped 22.7% from a year ago. Brazil, the top producer of Robusta, will have to pick up the slack. Given the seasonal risk of frost in Espírito Santo, we encourage traders and retailers to closely monitor climate indicators in Gro. ​