Brazil set to outdo US in terms of soybean production
The US Department of Agriculture (USDA) has just released a new report on the Brazilian oilseeds market.
It forecasts a record soybean crop in Brazil for the 2019/20 year, at 123.5 million metric tons (mmt). Brazil’s previous record crop was 122 mmt, recorded in 2017/18 season.
Notably, according to the latest forecast from the World Agricultural Supply and Demand Estimate (WASDE), the US soybean harvest will be less than 100 mmt in 2019/20, a drop of almost 20% on the previous season. “Thus, as long as local weather across the key producing states does not deteriorate significantly, Brazil is expected to overtake the US as the leading soybean producer in the world this coming season.”
The USDA revised up the forecast for 2019/20 soybean planted area in Brazil to 36.8 million hectares. "The revision is based on the market exuberance over soybean prices in the last several months. The delayed pace of planting should not significantly impact the harvest timeline, with the first soybeans harvested ready to ship in January."
The area expansion could have been larger if the local market believed that global soybean consumption would be higher, found the authors.
"There is still a lot of consternation over dampened Chinese demand due to the widespread prevalence of African Swine Fever (ASF), which has decimated swine herds and curbed feed needs. Additionally, [Brazilian soy] producers are keenly following the emerging trade truce between the United States and China. Producers are cognizant that a trade accord between Washington and Beijing is almost certain to lessen Brazilian exports and exert downward pressure on Brazil’s soybean prices."
Soybean exports from Brazil are forecast at 75 mmt for 2019/20.
The USDA report predicts that, for Brazil, in 2019/20, there will be 44 mmt of soybeans destined for processing. The authors expect 2019/20 production to reach 34.1 mmt of meal and 8.6 mmt of oil.
The publication anticipates that soybean meal consumption in the South American country will jump by around 4%, as livestock and poultry industries continue to expand production to meet rising global demand.
“Meal exports will remain nearly flat season-on-season. There is potential for positive upside if the real remains weak vis-à-vis the dollar, making meal exports more competitive. There is rising potential that Brazil and China will conclude an export agreement for soybean meal. However, in order for Brazil to be able to export to soybean meal to China, it would also need to conclude a separate sanitary and phytosanitary (SPS) agreement, meaning that Chinese market access is unlikely to come in the near future.”