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.