Report Highlights:

Post reduced its 2015/16 production forecast to 98 million metric tons (mmt). Dry and hot weather in central and northeast Brazil is having an impact in the progress of the crop. Post kept its export forecast at 55 mmt for the 2015/16 marketing year. In policy news, Brazil's soybean industry formally presented a study to the Ministry of Foreign Affairs to evaluate the possibility to file a World Trade Organization case against the United States over agricultural subsidies.

Oilseed, Soybean

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

33000

Area Harvested

30100

30100

32100

32100

33300

33000

Beginning Stocks

1269

1269

1527

1527

972

2492

Production

86700

86700

96200

96200

100000

98000

MY Imports

579

579

295

265

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

98022

97992

101272

100692

MY Exports

45747

45747

54000

52850

56650

55000

MY Exp. to EU

6000

6000

6000

6000

6000

65000

Crush

38274

38274

40000

39550

40000

40000

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

3000

3000

3050

3100

3100

3150

Total Dom. Cons.

41274

41274

43050

42650

43100

43150

Ending Stocks

1527

1527

972

2492

1522

2542

Total Distribution

88548

88548

98022

97992

101272

100692

(1000 HA) ,(1000 MT)

2015/16 Soybean Crop Lowered to 98 Million Metric Tons

Post lowered its forecast for Brazil's 2015/16 soybean production to a record 98 million metric tons (mmt). Area planted for soybeans is estimated at 33 million hectares (ha). The dry and hot conditions in Mato Grosso and other states in central and northeast Brazil are expected to impact yields.

As of December 22, according to the Institute of Agricultural Economics of Mato Grosso (IMEA), that the soybean crop in the state was rated 32% good or excellent, 25% average, 23% poor, and 20% very poor. The northeast area of Mato Grosso has been hit the hardest, especially the early planted soybeans. IMEA still estimates area in Mato Grosso at 9.2 million ha.

Other states in the Center-West are also suffering of hot and dry weather. The northern part of the state of Goais is being greatly affected by the adverse weather. Officials in the state, due to the planting delays as a result of the lack of rains, reduced their area estimates to 3.35 million ha for the upcoming crop.

In the MATOPIBA region (Maranhao, Tocantins, Piaui, and Bahia), similar weather patterns have delayed planting and forced farmers to plant (and replant) with less than optimal soil moisture levels. This region will heavily depend on good rains in January to avoid serious losses. Tocantins expects an

area similar to last year, at about 850,000 ha. In Maranhao, area is expected to be closer to 765,000 ha, but so far about 60 percent has been planted. In Piaui, officials forecast production at about 2 mmt, but if dry weather continues through January, the forecast is expected to be lowered. Officials in the state of Bahia are still optimistic that rains forecasted for January will help maintain good yields. With 90 percent of the crop already planted, officials expect a production in the state closer to 5 mmt.

The southern states of Brazil, mainly Paraná and Rio Grande do Sul, have experience too much rain due to the weather phenomenon El Niño. The result has been some planting delays and has created concerns about potential yield losses. However, officials in both states have reported that most of the crop is in good conditions and it is too early to assess potential yield problems.

2015/16 Soybean Crop Experiences Strong Forward Contracting

The 2015/16 growing season has experienced aggressive forward contracting due to the relative weak Brazilian Real (Real), which is supporting domestic prices. Farmers in Brazil have sold approximately 50 percent of their anticipated soybean production compared to 26 percent last year and 40 percent average.

Mato Grosso, as the largest soybean producing state, has forward contracted 55 percent of the crop, compared to 34 percent last year, according IMEA. In Paraná, the second largest soybean producing state, has also contracted about 35 percent of their anticipated 2015/16 soybean crop compared to just 8 percent last year.

Traders report that there was less activity during November due to a brief appreciation of the Real, but sales have picked up again as the Real reached (again) R$3.98 Reals per U.S. Dollar in early December. Post kept its export forecast at 55 mmt for 2015/16 MY. China will remain the main destination for Brazilian soybeans. It is expected that demand for soybeans in China will remain strong despite the economic slowdown.

Policy News – Brazilian Soybean Industry Presents Case Against U.S. Agricultural Subsides

For the first time, Brazil's soybean industry formally presented a study to the Ministry of Foreign Affairs (Itamaraty) to evaluate the possibility to file a World Trade Organization (WTO) case against the United States over agricultural subsidies. Itamaraty plans to review the petition and present it at the next meeting with Brazil's Foreign Trade Chamber (CAMEX) and the interagency expected in February.

It seems that the relatively low international prices, the high cost of production in Brazil, and Brazil's economic crisis, have spurred Brazilian farm groups to formally request the government to consider challenging the United States over U.S. weather insurance and price guarantee programs.