South American Soy Crop Uncertainty Grows

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In addition to South American weather, the soybean market this week will be focusing on the next official estimate of Brazil’s crop and USDA’s monthly supply/demand outlook, which is due out on Friday. Brazilian soybean crop estimates, which had been generally on the rise during January have started to fall off due to erratic rains in some growing areas.

A pair of Brazilian agricultural consultants on Monday lowered their crop forecasts. AgRural cut its forecast by 1 million metric tons (mmt) to 81.2 mmt, while Celeres said the crop would likely come in at 80.1 mmt, down from a January estimate of 80.84 mmt.

Both of those crop forecasts are below the official estimate from CONAB, the supply arm of Brazil’s Agriculture Ministry and also below USDA’s estimate. CONAB currently pegs production at 82.7 mmt, while USDA’s forecast is 82.5 mmt. CONAB will update its crop estimate Thursday morning.

The new lower crop estimates are in contrast to Friday’s 84-mmt estimate from U.S.-based Informa Economics, which was up from a previous forecast of 82.9 million. Also, on Jan. 28, Brazilian consultant Safras & Mercado raised its production estimate to 84.7 mmt from 84.3 million.

Both AgRural and Celeres said Brazil's soybean harvest is now 6% complete, although rains in the central-west region have slowed harvest in recent days and hurt yields.

Whether or not USDA changes its estimate of Brazil’s soybean production on Friday will likely depend on Thursday’s CONAB estimate. With Argentina continuing to dry out, it’s possible that USDA could trim another 1 mmt or so off its crop estimate for that country. USDA cut Argentine production by1 mmt to 54 million its January supply/demand update.

Concerns about potential crop losses in Argentina may continue to build this week as that country’s top growing province of Buenos Aires saw little rainfall from a weekend storm system. Argentina is expected to stay dry until late this week and temperatures will heat up again, boosting crop stress.

Northern parts of Cordoba and Santa Fe, Argentina’s second and third largest soybean producing provinces did see some rainfall over the weekend, with some good amounts of 1.9-2.4 in. falling from central Cordoba into northwest Santa Fe.

USDA is unlikely to make major changes on its U.S. soybean supply/demand balance sheet this month.

 

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

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on Mar 19, 2014

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