USDA Raises Brazil’s Soybean Crop Estimate, Global Supply Situation still Appears Tight for This Year

For soybeans, the USDA’s estimates for usage and supplies are mostly unchanged versus the previous month’s estimates. But there was an unexpected surprise as the Department raised crop projection//n for Brazil, contrary to the expectations of a lower crop for this country.

The crop size is estimated higher by 36.7 million bushels for Brazil’s soybean crop. Total soybean crush for the 2020/21 marketing year is expected to reach 2.2 billion bushels, with exports coming in around 2.25 billion bushels. Estimates for ending stocks of US soybean were left unchanged at 120 million bushels. Still the current stock for the USA is seen historically lower now.USDA’s season-average farm price projection was unchanged at $11.15 per bushel.

Estimates for total oilseed production (including soybeans, canola, sunflower oil, etc.) were slightly higher. For South America, the USDA s raised its estimates for Brazilian production to 4.924 billion bushels but slightly reduced the same for Argentinian soybean to 1.745 billion bushels.

Lowering of Argentina’s soybean crop estimates were as per the market expectations. Combined with the increase to Brazilian soybean output, the current level of global soybean stocks appears slightly better versus previous estimates.However, as long as the Brazilian soybean shipments remain delayed, markets may continue to factor in the prevailing tight supply conditions.

In all, the USDA left U.S. ending stocks unchanged, lowered the crop guess for Argentina, and raised production for Brazil’s crop size. Despite the hike in the world stocks (due to an increase in Brazilian soybean output estimate), consistent growth in world soybean usage, are most likely to keep ending 2020/21 supplies at the tightest level in twelve years.

This would imply that average soybean prices in India and other leading world markets shall maintain higher levels much above last year’s, in coming months.