An updated report on projected on Brazil’s soybean and oilseed crop production was published Tuesday by the US Department of Agriculture’s Foreign Agricultural Service (FAS).
Total soybean production for the 2016/17 marketing year is forecast to be about 114m metric tons, said the USDA’s agricultural attaché in his report.
“The 2016/17 soybean season in Brazil was almost perfect in terms of production,” he noted “The low incidence of pests along the crop cycle, good rainfall distribution in most of the country, and increased investment in technology, contributed to record yields by a large margin. National yields are estimated at 3.35 mt/ha.”
Brazil’s overall expected soybean production in 2017/18 has been forecast to drop from levels set in 2016/17 as production returns to a more trend-line yield, he said. The crop is anticipated to be about 105m metric tons.
The forecast for soybean sales in Brazil during marketing year 2016/17 is expected to be about 64m metric tons, which is a record for that country, according to the USDA publication. The sales process is benefiting from a large amount of exportable supply, the weakening of the Brazilian Real and continued strong demand from countries including China, said the author.
“Brazilian soybean producers have been selling its crop at a much slower rate compared to the last couple of years,” he added. “With the domestic prices in the last few months, farmers have been waiting for market signals triggered by the progress of the US crop or political developments in Brazil.”
Sales have increased as the currency has depreciated, and strong exports are predicted through the next few months. From February to May, Brazil has exported 33.9m metric tons, an increase of about 11.5% from the same period the previous year.
About 60% of the total production for 2016/17 is thought to be contracted, which is a drop of about 15% from this point in the previous year, wrote the attaché. Farmers may be waiting for a change in external factors to alter domestic price.
Depreciation of the domestic currency has increased prices of soybeans as they are priced in US dollars for the international market, he said.
“With the current market price levels in Brazil, many farmers can lose money or barely break even.
"Many farmers are betting for weather issues during the US soybean season, which can impact international prices, but most importantly, many are watching closely the political situation in Brazil.”
However, at this point, the market expects exports to drop about 3% for marketing year 2017/18, said the author. The decrease is based on an expectation that the exportable supply will be smaller from decreased production and increased domestic consumption, he added.
Although overall production is forecast to drop by about 8% in 2017/18 compared to 2016/17, the area planted is predicted to increase 1.2% to a record 34.4m hectares, wrote the USDA. The slowing pace of planting growth has been attributed to economic uncertainty and lower prices.
The country is expected to have an increase in soybean processing in the 2016/17 marketing year, with amounts reaching 42.5m metric tons, according to the USDA. The increase is based on growth in exports of soybean meal and new biodiesel mandates.
In 2017/18, the outlook continues to be that the country will process about 42.5m metric tons, said the attaché.