Soybean Plantings in Brazil Are Making A Good Progress Dec. 1, 2016
Highlights
Post maintained its 2016/17 production forecast at 101 million metric tons (mmt) due to a larger planted area and higher yields compared to last year. Area planted for soybeans in Brazil is estimated to be 33.7 million hectares, a record. Post kept its 2016/17 marketing year export forecast at 57 mmt due to strong demand by China and kept its crush forecast at 41 mmt due to higher domestic demand.
Oilseed, Soybean | 2014/2015 | 2015/2016 | 2016/2017 | |||
Market Begin | Feb 2015 | Feb 2016 | Feb 2017 | |||
Brazil | USDA Official | New Post | USDA Official | New Post | USDA Official | New Post |
Area Planted | 32100 | 32100 | 33300 | 33300 | 33800 | 33700 |
Area Harvested | 32100 | 32100 | 33100 | 33300 | 33800 | 33700 |
Beginning Stocks | 1656 | 1656 | 1240 | 1240 | 4450 | 2240 |
Production | 97200 | 97200 | 96500 | 95500 | 102000 | 101000 |
MY Imports | 325 | 325 | 410 | 450 | 350 | 300 |
MY Imp. from | 0 | 0 | 0 | 0 | 0 | 0 |
MY Imp. from EU | 0 | 0 | 0 | 0 | 0 | 0 |
Total Supply | 99181 | 99181 | 98150 | 97190 | 106800 | 103540 |
MY Exports | 54635 | 54635 | 51100 | 52000 | 58700 | 57000 |
MY Exp. to EU | 6000 | 6000 | 6000 | 6000 | 6200 | 6500 |
Crush | 40348 | 40348 | 39100 | 40000 | 41000 | 41000 |
Food Use Dom. | 0 | 0 | 0 | 0 | 0 | 0 |
Feed Waste Dom. | 2958 | 2958 | 3500 | 2950 | 3600 | 3050 |
Total Dom. Cons. | 43306 | 43306 | 42600 | 42950 | 44600 | 44050 |
Ending Stocks | 1240 | 1240 | 4450 | 2240 | 3500 | 2490 |
Total Distribution | 99181 | 99181 | 98150 | 97190 | 106800 | 103540 |
PRODUCTION
Soybean Production Forecast Kept at 101 Million Metric Tons (MMT)
Post kept its 2016/17 production forecast at 101 mmt, a record, due to a larger planted area compared to last year and higher yields based on trend. Post forecasts planted area at a record 33.7 million hectares (HA). The planting season, which started on September 15 in most states, has moved forward without major delays.
In the state of Mato Grosso, the crop was planted at a record pace. In the northeastern part of the country, planting continues to make good progress and the weather forecast looks favorable for those producers. In the southern part of Brazil, dryer conditions are becoming a concern for producers. In Paraná, soybean planting is almost done, but the dry area that developed in the later part of November could potentially impact yields. Rio Grande do Sul, which has planted about 60 percent of the forecasted area, is facing similar dry weather. At a national level, the soybean planting is about 75 percent complete.
PRICES
U.S. Dollar Appreciation Quickly Changing Domestic Prices Dynamics
Since the beginning of November, the U.S. dollar appreciated against the Brazilian Real (R$) by 5.3 percent as a result of the domestic political scenario, as well as international developments such as the U.S. elections. With this situation, the expectation is that domestic soybean prices in Reals may increase further due to the stronger dollar, which would translate into more Brazilian Reals when converted.
Due to the current currency volatility (Brazilian Real vs U.S. Dollar), commercialization of the 2016/17 crop is still below last year's pace. Producers continue to be more strategic with their selling strategy as they expect a rebound in domestic soybean prices in the next few months.
Less than 40 percent of the forecasted 2016/17 soybean production has been contracted, which is about 16 percent lower compared to last year.
TRADE
Export Forecast at 57 mmt for 2016/17 Marketing Year (MY)
Post kept its export forecast at 57 mmt for 2016/17 MY. China will remain the main destination for Brazilian soybeans. It is expected that demand for soybeans in China will remain strong. Chinese soybeans imports are supported by a growing domestic demand and a large domestic crushing capacity.
CONSUMPTION
Higher Biodiesel Demand Creates Opportunities and Challenges for the Sector
Total domestic soybean crush for the 2016/17 MY is forecast at 41 mmt. For the 2016/17 MY, post forecasts production of soybean oil at 8.2 mmt and production of soybean meal at 31.2 mmt. The higher soybean crush forecast compared to last year's estimate reflects growing demands to meet new biodiesel mandates by the Government of Brazil (GOB). As of March 2017, the blending requirement for biodiesel will increase from 7 percent to 8 percent.
The higher production of soybean oil to meet GOB biodiesel blending requirements is expected to increase the production of soybean meal over the next foфur years. The Brazilian market will be able to absorb some of the higher soybean meal production as the local economy improves, but export markets will be vital for the sector. As a result, the GOB and the private sector are already pursuing new market opportunities, specifically in Asia.