Post kept its forecast for Brazil's 2014/15 soybean production at a record of 93 million metric tons (MT). Post also kept its forecast for exports at 47 million MT, but a week-long truck drivers' strike is generating new concerns.

Oilseed, Soybean (Local)

2012/2013

2013/2014

2014/2015

Market Begin Year

Feb 2013

Feb 2014

Feb 2015

Brazil

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

27,700

27,700

30,100

30,100

31,500

31,600

Area Harvested

27,700

27,700

30,100

30,100

31,500

31,600

Beginning Stocks

1,233

1,183

1,309

1,288

3,269

2,388

Production

82,000

82,000

86,700

86,700

94,500

93,000

MY Imports

240

269

575

600

550

150

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

83,473

83,452

88,584

88,588

98,319

95,538

MY Exports

42,826

42,826

45,745

46,500

47,170

47,000

MY Exp. to EU

5,800

5,800

6,000

6,000

6,000

6,500

Crush

36,388

36,338

36,570

36,600

37,800

38,000

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

2,950

3,000

3,000

3,100

3,150

3,150

Total Dom. Cons.

39,338

39,338

39,570

39,700

40,950

41,150

Ending Stocks

1,309

1,288

3,269

2,388

10,199

7,388

Total Distribution

83,473

83,452

88,584

88,588

98,319

95,538

1000 HA, 1000 MT

2014/15 Soybean Production Forecast Kept at 93 Million Metric Tons

Post kept its soybean production forecast for the 2014/15 Marketing Year (MY) at 93 million metric tons (MT). Post also kept its planted total area at a record of 31.6 million hectares (including second crop soybeans), a 5 percent increase compared to the last growing season. This increase is a result area expansion and expectations of higher soybean prices.

Despite the dry spells in December and early January in areas of Western Bahia, Goiás, and Minas Gerais, good rains in late January and early February have eased concerns of yield losses, especially in Western Bahia. However, the heavy rains in Mato Grosso have created delays in the soybean harvest progress, which could reduce the planting window for producers expecting to plant corn as a second crop ("safrinha").

At a national level, it is estimated that the soybean area for 2014/15 is harvested at 18.5 percent as of February 21, compared to the average of 23 percent. In Mato Grosso specifically, the harvest reached 34 percent, compared to 45 percent last year. In Parana, the second largest soybean producer in Brazil, reached 23 percent compared to 25 percent last year.

Truck Drivers Strikes Create New Headaches

In protest against recent fuel and toll prices hikes as well as new taxes on transportation, Brazilian truck drivers have blocked road access in main soybeans producing areas, such as Mato Grosso and Paraná. The strikes, which lasted over a week and spread to a total of eleven states, created interruptions of diesel supplies and have threatened to hold up exports at ports. In addition, producers rely on trucks to deliver soybeans right after harvest as on-farm storage is still not common. Brazilian farmers can typically store an estimated 15 percent of oilseeds and grain production on-farm. If trucks are not available to move producers' production, it can further delay this year's harvest progress.

In areas like Mato Grosso, the main north-south road (BR163), the strikes effectively halted the flow of soybeans to ports in the north, which is becoming a good alternative option for soybean exports. It is estimated that about 13 percent of total soybeans exports in 2015 will leave from the ports in the north. In the south, the port of Paranaguá has reported a major slowdown of trucks delivering soybeans for exports.

As of February 26, 2015, the Brazilian government announced measures that could benefit truck drivers and transport companies, such as extending a year of free financing for vehicles, not increasing diesel prices for six months, and approving a law that would benefit the sector. Even though these announced measures have ended much of the blockage, not all leaders of the truck drivers associations are satisfied and it is not clear if this offer will resolve the situation.

Exports Forecast at a Record, but Still Heavily Dependent on China

Post kept its export soybean forecasts for the 2014/15 MY at a record 47 million MT. The devaluation of the Brazilian Real, about 28 percent since August 2014, is expected to support exports in 2015. At the same time, the slow commercialization of the new crop continues to be the main story for the 2014/15 year.

The slow pace of sales has been a result of the low global prices and the farmers' strategy has been to hold the crop a little longer in expectations of a weaker Brazilian Real. At this point, however, the pace should pick up in March as the capacity to hold the crop at the farm for long can be difficult due to the lack of storage capacity. Post does not expect a major impact on the total exports this MY. Instead, if soybean exports are much delayed, it will cause problems for corn exports of the "safrinha" crop. Typically, the "safrinha" crop begins the 2nd half of the year.

China will continue to be the main driver of Brazil's soybean exports this year. Despite the expected slowdown of its economy, the country is still forecast to import a new record in 2015. China is by far Brazil's most important market for soybeans. Since 2012, the Chinese market absorbs over 70 percent of Brazil's total soybean exports.

New Biodiesel Mandate Increases Domestic Demand for Soybeans

As previously reported, on December 1st, 2014, the Brazilian Government began implementing the increase in the biodiesel mandate (B7). This new law is a positive change for the industry as it has immediately increased the demand for domestic soybeans for crushing. In December alone, it is estimated that an additional 300,000 MT of soybeans were crushed to meet this new mandate.

Post maintained its 2014/15 MY forecast for crushing since it already took into account this new mandate. However, post revised its 2013/14 MY estimate by an additional 300,000 MT to a total crushing demand of 36.6 million MT. The change is based on new industry data and higher demand in December as a result of the B7 mandate.