A report from the US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) raised the predicted levels for soybean production and export for the US competitor.
“Post increased its 2016/17 production forecast to 102 million metric tons (mmt), a record,” the attaché said. “Favorable weather in most parts of the country is helping the progress of the crop.”
The expectations for export were raised to a record 58 mmt for the 2016/17 marketing year, he said. The increase was based on supply available and demand from China.
The strength of the dollar has been a challenge for US producers, said David Bau, extension educator in agricultural business management with the University of Minnesota. Although, soybean exports from the US have been strong, the market is already starting to be influenced by production in South America, which contribute to the “February lows.”
“The soybean exports are good, but now we’re coming to the point when South American exports are going to take over,” he told us in an earlier interview.
The area planted this year was about 33,800 ha, an uptick from the 33,300 ha planted for the 2015/16 marketing year, said the USDA.
“Planted area was kept at 33.3 million ha based on CONAB [Brazil’s National Food Supply Company] estimates,” said the attaché. “Due to weather problems throughout the 2015/16 production, yields were heavily impacted, estimated at 2.87 mt/ha.”
Production in February of 2016 was set at about 96,500 mmt by the department. This year it is expected to be 102,000 mmt.
The increased production is based upon the additional planted area and yields, said the attaché. “Post increased its estimate for planted area to a record 33.8 million ha, as a result of higher than expected planted area in the north and northeast,” he added.
“The planting season, which started on September 15 in most states, has continued to move forward without delays and weather continues to be favorable in most parts of the country,” he said. “Mato Grosso, the largest soybean state in Brazil, the crop is progressing very well and the weather forecast looks favorable. As a result, the 2016/17 harvest in this state is forecast to be a record.”
However, feed crop conditions in the northeastern part of Brazil have not been as favorable, he said. The region has had limited rainfall and is not expected to see more water in the near future.
Brazil's export market
Exports in the marketing year are expected to total about 58,700mmt, which marks an overall upturn from the previous year, said theUSDA. And, of the amount exported, about 6,200 mmt are set to go to the EU, an increase from the 6,000 mmt last year.
China, which is Brazil’s most important market, is expected to see a 3% increase in imports from the previous marketing year, said the attaché. “In addition, with current international prices and the US dollar expected to appreciate further in 2017, Brazilian soybeans will be competitive for international buyers,” he added.
However, the 2016/17 crop also has been contracted at a reduced rate than in previous years, based on domestic prices and currency volatility, said the USDA. Domestic prices were below last year’s in the September to December period.
“The retraction in forward contracts is based on expectations that the US dollar will appreciate further in 2017, which may attract foreign purchasers to Brazil and push domestic prices up in Brazilian Reals due to the exchange rate,” said the attaché.
There also is an expectation that the country will see increased domestic soybean crush, he said.
“The higher crushing forecast compared to the 2015/16 MY is a result of higher demand for biodiesel domestically and higher foreign demand for soybean oil and meal,” he said. “The sector is optimistic that demand overseas for soybean oil and meal will remain strong, especially in the Asian markets.”