South America weather risk puts global corn and soybean supply on edge

Key takeaways

• Brazil's soybean harvest is on track for a record ~180 million tonnes in 2025-26
• Southern Brazil and Argentina are the key weather watchpoints
• Argentina's crops are in reproductive phases, making February and March rainfall critical
• Argentine soybean exports set to normalize after an elevated 2024-25
• The US produced its largest corn crop on record, driving a diversified export campaign
• US soybean trade flows have been reshaped by China trade tensions
• The soy-corn ratio near 2.4 is seen as too high, with sell-off risk ahead of USDA plantings report

Brazil: Record soybean crop on track, but southern conditions bear watching

Brazil's soybean harvest is approximately 25% complete, broadly in line with the five-year national average. Progress has been slowed in Goiás and Mato Grosso do Sul due to heavier-than-usual February rainfall, but these aren't the country's largest producing areas, so the impact on the initial export pace is limited. The overall 2025-26 crop is still expected to reach around 180 million tonnes - in line with the USDA's February estimate of 182 million tonnes, and a new record, driven by acreage expansion in central and northern Brazil rather than higher yields.

The more significant concern is in the south, particularly Rio Grande do Sul, where below-average rainfall has raised questions around yield potential for crops still in their pod-fill and reproductive phases. On exports, Brazil is pricing very competitively - Paranaguá offers are currently around $0.80 to $1.00 per bushel below US Gulf values through at least May delivery, supporting a strong and prolonged export campaign in 2025-26.

Argentina: Crop in a critical window as dryness deepens

What started as a promising season for Argentina has turned more cautious. Very good rainfall in August and September gave way to a lull in December, and January brought a significant rainfall deficit - particularly across the Pampas region, which covers parts of southern Córdoba, southern Santa Fe, and northern Buenos Aires.

As a result, soil moisture reserves are now very limited, and both the early and late corn and soybean crops are moving through their reproductive phases - the period when yield potential is most sensitive to adverse weather. Some near-term rainfall is expected this week and next, but conditions are forecast to turn warmer and drier in the second half of February and into early March, which is adding a risk premium to CBOT pricing. Without sustained precipitation, the optimistic yield assumptions underpinning current production and export forecasts will likely need to be revised lower.

Argentine soybeans: Exports normalizing after an unusual 2024-25

Argentina's soybean export campaign in 2024-25 was unusually high - a result of two specific factors that are unlikely to repeat. First, Argentina temporarily cut export taxes to 0% in September, which incentivized the export of whole soybeans rather than processed meal and oil, reversing the usual tax structure that favors domestic crushing. Second, US-China trade tensions led China to seek alternative origins, with Argentina a clear beneficiary.

Both of those tailwinds are gone. Export taxes have reverted to their standard structure, and the crop is smaller this year - around 48 million tonnes - partly because farmers planted more corn in 2025-26 following favorable agronomic conditions in August, which reduced soybean acreage. The 2025-26 campaign is expected to return closer to historical averages.

Argentine corn: Recovery expected, weather permitting

Argentina's corn export campaign in 2024-25 underperformed, with a notable drop-off once the US crop came online. The 2025-26 outlook is more positive - but it is contingent on the weather.

Current projections assume average or above-average yields, which would allow Argentina to return to a more normal export campaign. At current FOB offers, Argentina is pricing competitively against the US across Southeast Asia, East Asia, and North Africa. However, if crop conditions continue to deteriorate in the coming weeks, those export assumptions would need to be scaled back.

US corn: Record crop drives a broad and diversified export campaign

The US produced its largest corn crop on record this year - around 17 billion bushels - off the back of near-90-year-high acreage and a record yield. That has translated directly into exceptional export performance, with shipments in the early months of the marketing year running well above both the five-year range and 2024-25 levels.

What makes this year's campaign stand out is its breadth. Unlike 2021-22, when Chinese demand was the dominant driver, this year's sales are coming from a wide range of buyers: Mexico, Japan, South Korea, Taiwan, Colombia, North Africa, and the EU. Notably, there have been no US corn sales to China in 2025-26. A key factor supporting the US has been Brazil's reduced presence on the corn export market, driven by stronger domestic ethanol demand - a trend expected to continue. Ukraine's corn exports are beginning to recover, which may start to squeeze the US out of North Africa and EU markets. Kpler currently estimates US corn exports at around 3.1 billion bushels, compared to the USDA's projection of 3.3 billion. Looking ahead, if Argentine weather conditions improve sufficiently, competition from Argentina could cap the typical US seasonal export peak around the March-May window.

US soybeans: Trade policy reshaping the export calendar

US soybean exports have followed an unusual pattern this marketing year. October and November typically account for around 50% of annual US soybean shipments, but trade tensions with China compressed early-season volumes, diverting flows toward non-China destinations instead.

The US-China agreement reached in late October gave way to increased Chinese purchases, but China bought gradually rather than in a large flush - with the 12 million tonne commitment only being completed by January, pushing the seasonal export peak well outside the traditional autumn window. Looking ahead, the team does not expect a strong recovery in the second half of the marketing year. With Brazilian origin running $0.80-$1.00 per bushel below the US, the incentive for China to buy additional beans is limited - a calculation presented in the webinar showed that buying 8 million additional tonnes from the US instead of Brazil would cost China approximately $300 million more.

Outlook: Soy-corn ratio and upcoming planting decisions

With corn and soybeans still offering the greatest contribution margins among US field crops, the 2026 planting decision will come down to the soy-corn ratio. At just shy of 2.4 at the time of the webinar, the team views this level as too high - inflated in part by headline speculation around potential Chinese soybean purchases rather than underlying fundamentals, with little equivalent bullish impetus in the corn market to justify the spread.

If the ratio stays elevated, it would favor greater soybean acreage in the USDA's prospective plantings report expected at the end of March. Running that through the 2026-27 balance sheet would likely produce higher ending stocks - and that could be the catalyst for a sell-off. Funds have already accumulated a significant net long position in soybeans over recent weeks, making the market more vulnerable to a reversal. Argentina's weather over the next four to six weeks remains the primary near-term swing factor across both corn and soybean markets.