New Delhi — Brazil's soybean production in the 2019-20 crop year (September-August) is forecast to reach an all-time high of 126 million mt, up 8%, year on year, and 1% higher than the February estimate, on favorable weather across the country, according to the United States Department of Agriculture, or USDA.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The soy yield is also expected to rise 5% on the year to 3.41 mt/hectare given sufficient rainfall across the region since October, while planted area is estimated to climb 3% higher year on year at 36.9 million ha.
Soybean area continues to increase, and this year Brazil will overtake the US as the world's leading soybean producer, the USDA said in its outlook report Tuesday.
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, Brazilian national agro agency Conab said.
Early harvest reports indicate productivity was above average in large producing states such as Mato Grosso (34 million mt), Paraná (20 million mt), Goiás ( 12 million mt), and Mato Grosso do Sul (10 million mt), the USDA said.
However, there are concerns regarding soy productivity in Rio Grande do Sul, the country's second biggest bean producing and exporting region, Conab said.
The state has been suffering from dry weather since December, which could severely lower its soybean productivity.
The southern half of Rio Grande do Sul suffered from drought, and productivity are expected to be below-average at 18 million mt, the USDA said.
According to analysts, Brazil's total soy output in 2019-20 could be revised a little lower due to unfavorable conditions in Rio Grande do Sul, even though
the country is poised to post an all-time high output in 2019-20.
The bullish Brazilian soy output forecast could make it more price-competitive against US-origin beans in the coming weeks, market sources said.
According to S&P Global Platts, SOYBEX FOB Santos for April loading was assessed at $340.72/mt on Tuesday, while SOYBEX FOB New Orleans was assessed at $344.01/mt.
Brazil -- the world's largest soybean supplier -- is forecast to export 77 million mt in 2019-20, up 3% year on year, the USDA said.
Brazil is still the primary soybean supplier to China, the world's largest soy consumer, accounting for 80% of its total soybean purchases, according to Chinese customs data.
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.
In Conab's December report, domestic soybean consumption for 2019-20 (September-August) 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 a December report by Abiove, the Brazilian soy crushers association.
Currently, diesel sold in Brazil contains 12% biodiesel and is known as B12. This blend is scheduled to rise to 15% (B15) in 2023.
Apart from higher soybean oil consumption, Brazil's domestic purchases of soybean meal have also increased.
As global demand for meat products rises, primarily fueled by Asian markets that have been hit by African swine fever,
the trend of rising domestic soybean crushing demand is set to continue in Brazil, which needs the high-protein soybean-based animal feed for its cattle industry, sources said.
The global outbreak of novel coronavirus, which has so far claimed over 4,000 human lives, could be a major concern for Brazilian soybean farmers, an analyst from Conab said.
As the epidemic spreads, governments have put heavy restrictions on transportation, which has heavily affected commodities trade, including soybeans, a top US trade official said.