Brazil's Conab raises 2019-20 soybean output estimate by 0.8% to 123.2 million mt

New Delhi — Brazil's soybean production in the 2019-20 crop year (September-August) was estimated at an all-time high of 123.2 million mt, up 7% year on year and 0.8% higher than the January estimate on favorable weather, national agricultural agency Companhia Nacional de Abastecimento said Tuesday.

That was as the soy yield was also expected to rise 4.4% on the year to 3.35 mt/hectare on sufficient rainfall across the region in since October.

According to Conab, planted area was also forecast to grow 2.6% year on year to 36.8 million ha on favorable weather.

Despite a delayed start in September due to dry weather, soybean planting in Brazil was completed on time as primary soy producing regions, such as Mato Grosso, received sufficient rainfall, Conab said.

Conab is yet to publish its latest estimates on Brazil's soybean trade for 2019-20 as the agency is in the process of finalizing the country's 2018-19 soy harvest data.

Brazil -- the world's largest soybean producer and exporter -- is forecast to export 72 million mt in 2019-20, up 3% year on year, while ending stocks were forecast down 39% to 2.18 million mt, Conab said in its December report.

The country's soybean exports in calendar 2019 were 11% lower on the year at 74 million mt, Brazil's foreign trade department said a report last month.

SOYBEAN COMPLEX

Brazilian soy meal production in 2019-20 is estimated at 35.26 million mt, up 6% on the year, while soy oil is seen rising 6% to 9.16 million mt, Conab said in its December report. Brazil is forecast to export 16.2 million mt of soy meal in 2019-20, up 2% on the year, while soy oil exports are estimated at 900,000 mt, down 14%, the agency said in December.

Brazil is the world's second-largest soy meal and oil exporter after Argentina.

ROAD AHEAD

Brazil is still the primary soybean supplier to China, the world's largest soy consumer, accounting for 80% of its total soybean purchases, December Chinese customs data showed. However, the US-China phase one trade deal, greater domestic crushing demand, and a higher biofuel mandate may limit Brazilian export growth in the coming months, sources said.

According to Conab's December report, 2019-20 (September-August) domestic soybean consumption is forecast at 48.6 million mt, up 8% year on year.

Domestic soybean oil demand is set to increase significantly as the government mandates biodiesel blending, the Mato Grosso Institute of Agricultural Economics said in a January report.

Soyoil is the primary input for biodiesel production in Brazil, accounting for nearly 75% of the total, according to the December report of Abiove, the Brazilian soy crushers association.

Currently, diesel sold in Brazil contains 11% biodiesel and is known as B11, Abiove's report said. This blend is scheduled to rise to 12% (B12) by March 2020 and touch 15% (B15) in 2023, the report added.

Apart from higher soybean oil consumption, Brazil's domestic purchases of soybean meal has also increased.

As global demand for meat products rise, primarily fueled by African swine fever-hit Asian markets, the trend of rising domestic soybean crushing demand is set to continue in Brazil, which needs the high-protein soybean-based animal feed to meet consumption demand from its cattle industry, sources said.