Report Highlights:

Post increased its forecast for Brazil's 2015/16 soybean production to a record 100 million metric tons (mmt). Favorable rains in January and February lessened the anxiety on potential yield impacts in the Center-West. Exports for the 2015/16 Marketing Year (MY) are forecast to reach 55.5 mmt due to strong demand in China and the weak Brazilian Real expected through 2016. Post increased its domestic crush forecast for 2015/16 MY to 40.5 mmt and its 2014/15 MY estimate to 40.2 mmt, as a result of higher domestic and export demand.

Oilseed, Soybean (Local)

2013/2014

2014/2015

2015/2016

Market Begin Year

Feb 2014

Feb 2015

Feb 2016

Brazil

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Planted

30100

30100

32100

32100

33300

33200

Area Harvested

30100

30100

32100

32100

33300

33200

Beginning Stocks

1269

1269

1577

1577

200

300

Production

86700

86700

96200

96200

100000

100000

MY Imports

579

579

325

325

300

200

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

88548

88548

98102

98102

100500

100500

MY Exports

45747

45747

54635

54635

56650

55500

MY Exp. to EU

6000

6000

6000

6000

6000

6500

Crush

38274

38274

40300

40200

40000

40500

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

2950

2950

2967

2967

3000

3050

Total Dom. Cons.

41224

41224

43267

43167

43000

43550

Ending Stocks

1577

1577

200

300

850

1450

Total Distribution

88548

88548

98102

98102

100500

100500

(1000 HA) ,(1000 MT)

2015/16 Soybean Crop Forecast Increased to 100 Million Metric Tons

Post increased its forecast for Brazil's 2015/16 soybean production to a record 100 million metric tons (mmt). The higher production is a result of an increase (by 200,000 hectares) in Post's estimate for planted area, to a total of 33.2 million hectares (ha). The higher plated area is based on the latest estimate by the Brazilian Food Supply Company (CONAB). The higher production forecast is also supported by the good rains through February in the Center-West, which is expected to help yields.

In general, yields for 2015/16 are expected to be better than what was anticipated back in December 2015. The states of Parana, Rio Grande do Sul, Bahia, Goais, and Mato Grosso do Sul are all expected to have better yields compared to the 2014/15 season. In contrast, Mato Grosso and states in the northeast (Piaui, Maranho, and Tocantins) are expected to have lower yields compared to last year due to the dry and hot conditions early in the season. However, the national yield is forecast to better than last year and reach 3.01 metric tons per ha.

Soybean Exports Forecast to Hit a Record for 2015/16 Marketing Year (MY)

The 2015/16 MY soybean exports are forecast to reach 55.5 mmt, a record. The strong demand in China and the strong dollar will continue to incentivize exports. The dollar appreciated over 30 percent in relation to the Brazilian Real (BRL) in 2015 as a result of the economic and political crisis in Brazil.

The BRL is not expected to recover much in 2016, making exports lucrative for producers despite low global prices.

The economic crisis and the weaker BRL, which has increased domestic prices for soybeans (and other commodities), have also made the Federal and State Government look for new revenues sources. As a result, soybean (and other commodities) exports have been targeted. In the state of Goais, the state government proposed an increase of the state's export tax. However, due to heavy pressures from producers and the “farm group" of Brazil's House of Representative, the Governor of Goias backed down and suspended Decree # 8,548. This is likely to discourage other state government from enacting similar policies.

At the Federal level, some members of the government have discussed the need to reactivate an export tax for agricultural products. The export tax of 2.3%, which agricultural exports have been exempt for some time, would in theory help increase revenues to support Brazil's social security program. Many people in the government have expressed opposition to this idea, especially the Minister of Agriculture, Katia Abreu. The measure is currently being debated and has not been implemented.

Brazilian Government Considers Increasing Biodiesel Blending Mandate to 10%

Post increased its domestic crush forecast for 2015/16 MY to 40.5 mmt and its 2014/15 MY estimate to 40.2 mmt, as a result of higher domestic and export demand. Soybean meal production increased in 2014/15 and is expected to slightly increase in 2015/16 due to the higher demand by the poultry and pork sectors. Soybean meal exports also increased in 2014/15 MY as a result of higher demand by Indonesia, Vietnam, and Thailand. Soybean oil is also contributing to the higher soybean crushing demand as a result of the higher domestic production of biodiesel.

In regards to biodiesel production, the Brazilian House of Representatives approved on March 4, 2016 an increase of 10% of biodiesel mandatory blending with diesel by 2019. It was reported that Brazil's House of Representatives unanimously approved the law to increase the biodiesel blending requirement with diesel from 7% to 10% by 2019. The blending requirement would increase to 8% the first year once the law is implemented, then to 9% and 10%, respectively, by 2019. The bill has the support from the government, especially from the Ministry of Mines and Energy, and now goes to for President Rousseff's signature