Brazil's 2021-22 soybean output raised on previous estimate: Conab

Brazil's soybean output forecast for the 2021-22 marketing year (January-December) has been raised to 124.3 million mt, up from 123.8 million mt in previous estimates, the country's national agricultural agency Conab said June 8.

The increase comes amid better-than-expected yield in the drought-battered southern states and Mato Grosso do Sul, which is likely to ease supply concerns, albeit slightly.

Conab made a small upward adjustment to the soybean production data for the 2021-22, particularly due to higher-than-expected productivity of Mato Grosso and Rio Grande do Sul, the report said.

However, compared with last year, the 2021-22 output is 14 million mt lower amid widespread drought between November and January in the southern regions of Brazil, it said.

World's largest soybean producer was expected to produce more than 145 million mt in 2021-22, but a spate of drought in key states has cut the overall output forecast by over 20 million mt.

The year-on-year reduced output expectation of Brazilian soybeans in 2021-22 has been supporting basis prices for an extended period of time.

Platts assessed June 7 SOYBEX FOB Santos for July deliveries were estimated at $688.70/mt, compared with $644.79/mt May 7.

Higher acreage, lower yield

Although the 2021-22 soybean acreage has increased 4.6% year on year at 40.99 million hectares, the productivity remains 14% on the year at 3,032 kg/ha, the report said.

Conab's forecast cuts came on the back of a series of revised projections by some agricultural consultancies.

Since early-January, local agricultural consultancies have already made frequent and sizable cuts in their 2021-22 forecast for Brazil amid prolonged drought in the country's south.

Curitiba-based AgRural expects Brazilian soybean output in 2021-22 at 122.8 million mt, down 23 million mt on November estimates, while Porto Alegre-based Safras & Mercado has reduced its expectation by 22 million mt to 122 million mt.

Exports versus crush

Conab sees a huge upsurge in demand for domestic crush amid rising soybean oil prices. As a result, the exports are seen lower on the year.

The total crush for MY 2021-22 was forecast at 46.85 million mt, up 3.8 million mt on previous estimates, the report said.

While soybean export from Brazil in MY 2021-22 is now seen at 75.23 million mt, down 1.8 million mt from previous estimates, it is 10.5 million mt lower on the year on output reduction, Conab said.

The reduction in soybean export estimates and the increase in domestic crush are due to an expectation that the soybean oil shipments will rise in 20212-22 amid high crush margins, the report said.

With very attractive crush margins, crushing and exports of soybean oil and soybean meal should be high and, therefore, soybean oil exports are now estimated at 1.8 million mt, 3% higher year on year, and Soybean meal exports at 18.7 million mt, up 6% on the year, Conab said.

Brazil is the leading producer and exporter of soybeans, accounting for more than one-third of the world's soybean production.