Greetings from the soggy Midwest! Severe storms moved across the US over the weekend, providing some much needed precipitation, especially to southern states.

Now for a look at Brazil... Severe weather and crop failures in south Brazil along with increased consumption demand are said to be driving up corn and soybean meal costs by at least 3 to 3.5 per cent.

Informa Economics FNP believes the 2011/2012 planted area for summer corn and soybeans increased by 5.3 per cent year on year but because of the serious drought in south Brazil, production will be down about 8 per cent versus the previous season. The US Department of Agriculture (USDA) has estimated an 11 per cent soybean production decline in the area.

Winter corn areas are expected to increase and might make up the summer production deficit, but it's too early to predict the winter crop.

Soybean exports in marketing year 2011/12 are estimated at 29 mmt, down 14 per cent from the 2010/11 record of 33.8 mmt. Over the last few months, current high prices and a favorable exchange rate have directed Brazilian soybeans to the export market as opposed to the domestic crush market, says the USDA Brazil Gains Report. However, USDA expects the market to turn inward to supply crush in the second semester of 2012.

Add these expectations together with a drought-reduced short crop and you get a reduced Brazilian export share in 2011/12. That said, USDA forecasts a recovery in Brazil's export presence in 2012/13, reaching a new record of 35 mmt based on continued strong global demand.

La Nina has also had a significant impact on the Argentina's harvests in 2011 and 2012. The result: Argentina's international market share slipped the last few years.

Argentina's soybean production is also slipping. In 2009/2010 it was reported at 54.5 million tons, but FNP expects it to only reach 45 million tons in the current season. Corn is following a similar course, falling from 23.3 million tons harvested in 2010 to 20.5 million tons this season. Argentina's corn exports have also seen a dip from 16.5 million tons in 2010 to 13.5 million this year.

Competition between domestic and international markets will be aggressive come mid-September when the US harvest is underway due to the limited global corn and soybean supply.

To read more about Brazil's crop expectatations, click here.

Have a great week!