Lower soybean output forecast for Brazil

Brazil’s soybean output will be lower, according to multiple reports that track soybean production in the South American country.

In its June report, Brazil’s National Supply Company (Conab) reduced its estimate to 147.3 million metric tons (mmt) – down from the 147.6 mmt in the May forecast. Last year’s production was 4.7% higher at 154.6 MMT.

In the June World Agricultural Supply and Demand Estimates (WASDE) report, the USDA also revised down its estimate for Brazil from 154 mmt to 153 mmt. 

Right in the middle, consultancy Safras & Mercado updated its estimate to 149 MMT, down from the previous forecast at 151 mmt.

Soybean harvest is 99% complete in Brazil. The exception is in Rio Grande do Sul, where significant flooding has slowed down progress and only 95% is complete, according to Conab.

This week 3.5 inches of rain is forecast for the southern states in Brazil. The west-central region, where most of the second corn crop is being planted, will be dry for the week with some exceptions in Mato Grosso do Sul.

Market uncertainty

Last week, a decree that would have impacted agricultural exports was revoked by the Brazilian Congress. The decree, signed by President Lula, would have eliminated tax credits for exporters, effectively imposing a nearly 20% duty on exports. Congress considered the decree unconstitutional and lawmakers argued that any tax change would need at least 90 days for Congress to review.

Despite that, Brazil’s currency devalued 4¢ in one day against the U.S. dollar. According to market analysts, this provoked market uncertainty as farmers had a reluctancy to sell their crops.

“At this point, producers want to get paid more for corn than what the market has to offer. They are waiting to have more supply of the new crop to decide on their sales. Deals were very limited,” reads a report from Safras & Mercado.

Argentina’s soybean harvest 96% complete

Without any changes to its soybean production estimate, the Buenos Aires Cereal Exchange reported that the Argentina soybean harvest reached 96% complete. Corn output also remained unchanged, and corn harvest is 40% complete.

The precipitation in the second week of February was crucial to recover soybean yields on the late planted crops in the provinces of Buenos Aires, La Pampa, and Córdoba, according to the Cereal Exchange. Corn wasn’t as lucky and has had more stress, which is why production is estimated to be 8.5% lower than the five-year average.