Iowa farmer Matthew Kruse is in Brazil watching two things this week:

So far, both situations are a bit disappointing for a U.S. farmer looking for a price rally.

A 200-million drop in corn supply was a deeper cut than the trade was expecting from Tuesday’s WASDE, Kruse says. That afternoon’s 7-cent rally was a bit less than Kruse expected.

“I think not too long ago we probably would have been looking for a 20-cent jump based off of this news,” Kruse says. “I consider it to be pretty bullish.”

He’s holding out for a delayed reaction. “Hopefully we'll get some more follow through,” Kruse says. “But it is good news, you know … better news than what we were expecting.

Meanwhile, a forecast in Brazil that includes a short dry spell in the midst of adequate rain is encouraging for soybean producers there – and bearish on market price projections.

“If that happens, you're going to see a lot of traders start to ratchet up their yield ideas,” Kruse says. “Some private estimates [already are] increasing yield by at least 2%, maybe even up to 5%.”

Adding even one bushel to the yield average for 117 million acres is, well, another 117 million bushels.

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“So, things can ratchet up pretty quickly,” Kruse says.

In the overall, increased production in Brazil piles the South American output almost exponentially higher. “Cumulatively with Brazil, Argentina and Paraguay, they're looking at 231 million metric tons,” Kruse says. “That's about a 1½ billion bushels or about one-third of U.S. total soybean production.”