Soybean Crop of Brazil estimated lower versus earlier expectations

The latest reports now indicate that the crop size in Brazil may be lesser than the earlier expectations.   As per the CONAB, the crop of Brazil may fall by 0.76 million tons from 134.45 million tonnes estimated in December to 133.69 million in the January month’s estimate. 

CONAB is a public company linked to the Ministry of Agriculture, Livestock and Supply. It now expects the 2020/21 Brazilian soybean acreage at 38.19 million hectares (94.3 million acres), which is up 17,000 hectares (42,000 acres) from their December estimate. Rise in acreage is offset by reduced projections for the crop yields. The Brazilian soybean yield is now estimated at 3,500 kg/ha (52.1 bu/ac), which is down from last month's estimate of 3,522 kg/ha (52.4 bu/ac). The 2019/20 soybean yield was 3,379 kg/ha (50.3 bu/ac). But year on year the 2020/21 soybean production is projected to be 8.8 million tons or approximately 7%. Brazil had exported 75 million mt of soybeans, up 34% year on year, with 73% of these shipments purchased by China.  

Likewise, the USDA (US Department of Agriculture) now maintains its 2020/21 forecast for Brazilian soybean’s planted area increment at 38.5 million hectares (ha) and soybean production at 131.5 million metric tons (MMT). This season sowing was delayed by as much as six weeks in some areas of the country, because of drier than normal weather conditions. For the 2020/21 MY, soybean crush is estimated at 45.5 MMT. Due to delated planting for 2020-21 season was delayed by dry weather in September and October, the US Department of Agriculture expects soybean export season in Brazil to get delayed by few weeks. 

The Department of Agriculture of US expects that global demand for soybeans may not witness any significant fall in global demand from the second wave of the coronavirus pandemic. Overall meat consumption is not expected to suffer in the leading soybean importing countries of China and Europe, despite the economic slowdown. Already there are reports of booking of Brazilian soybeans by China in December 2020, for March of 2021 delivery. 

As a significant quantity has been shipped out from Brazil to China, Brazilian stocks can remain at very low levels, in forthcoming months. This will be the lowest level of stocks seen ever in Brazil. As demand for Brazilian soybean will be stronger for China, the Brazilian soybean inventory is expected to remain at less than one percent of the domestic supply.