January 6, 2020

With new record crop forecast, Brazil set to be No. 1 soybean producer in 2019-20

Brazil is forecast to overtake the US as the leading soybean producer in the world during the 2019-20 season (September 2019-August 2020), according to the US Department of Agriculture.

USDA, in its updated report on the country's oilseeds, said soy production is forecast at a record 123.5 million tonnes based on trend yields. Brazil's previous record crop was 122 million tonnes, recorded in the 2017-18 season.

On the other hand, US soybean harvest will be less than 100 tonnes in 2019-20, a drop of almost 20% on the previous season, according to the forecast from the World Agricultural Supply and Demand Estimate (WASDE) issued by the USDA.

The updated report raised its forecast for planted area slightly to 36.8 million hectares, given the market exuberance over soybean prices in the last several months.

It said the Brazilian real's weakening against the dollar from about 4.09 real in October to 4.17 to the dollar in the first two weeks of December could have pushed some producers to sow a slightly larger area than they had planned.

The area expansion could have even been larger if the local market believed that global soybean consumption would be higher, the report said. "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, producers are keenly following the emerging trade truce between the United States and China".

Meanwhile, the USDA revised up Brazil's soybean exports for market year 2018-19 (February 2019 to January 2020) to 73 million tonnes, helped by record volume of exports in October and November 2019.

Soybean exports for MY 2019-20 (February 2020 to January 2021) are forecast to reach 75 million tonnes, based on recovery in available supplies. However, the USDA anticipates subdued demand from China due to, among others, drop in feed demand from China, which will continue to grapple with the adverse effects of African swine fever; and Brazil's loss of some portion of its China export share to the US in the wake of a trade deal between Washington and Beijing that was announced in mid-December 2019.