Highlights

Post increased its 2016/17 production forecast to 102 million metric tons (mmt), a record. Favorable weather in most parts of the country is helping the progress of the crop. Post also increased its export forecast to 58 mmt, a record, for the 2016/17 marketing year as a result of higher exportable supplies and strong demand by China.

Production, Supply, and Demand Statistics

Oilseed, Soybean Local

2014/2015

2015/2016

2016/2017

Market Begin Year

Brazil

Feb 2015

Feb 2016

Feb 2017

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Planted

32100

32100

33300

33300

33800

33800

Area Harvested

32100

32100

33100

33300

33800

33800

Beginning Stocks

1656

1656

1240

1240

4520

2720

Production

97200

97200

96500

95500

102000

102000

MY Imports

325

325

380

380

350

350

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

99181

99181

98120

97120

106870

105070

MY Exports

54635

54635

51000

51200

58700

58000

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.Cons.

2958

2958

3500

3200

3600

3500

Total Dom. Cons.

43306

43306

42600

43200

44600

44500

Ending Stocks

1240

1240

4520

2720

3570

2570

Total Distribution

99181

99181

98120

97120

106870

105070


Post increased its 2016/17 production forecast to a record 102 mmt, due to an increase in its planted area and yields. Post increased its estimate for planted area to a record 33.8 million ha, as a result of higher than expected planted area in the north and northeast. The planting season, which started on September 15 in most states, has continued to move forward without delays and weather continues to be favorable in most parts of the country.

In Mato Grosso, the largest soybean state in Brazil, the crop is progressing very well and the weather forecast looks favorable. As a result, the 2016/17 harvest in this state is forecast to be a record. On the other hand, a region of concern is the northeastern part of Brazil. After a good start to the planting season, the region entered into a dryer pattern in the last few weeks and there is little rainfall expected in the near term forecast. In western Bahia for example, rains are not expected until the early weeks of January. The soil moisture in this part of the country is estimated to be at the 10 percent mark, which has raised concerns among soybean producers.

Post kept its production estimate for 2015/16 at 95.5 mmt based on data from Brazil's National Food Supply Company (CONAB). Planted area was kept at 33.3 million ha based on CONAB estimates. Due to weather problems throughout the 2015/16 production, yields were heavily impacted, estimated at 2.87 mt/ha.

2016/17 Soybean Crop Continues to Experience Slower Forward Contracting

The 2016/17 soybean crop continues to be contracted at a slower pace due to current domestic prices and currency volatility (Brazilian Real vs U.S. Dollar). Between September and December of this year, domestic soybeans prices were lower compared to the same time last year. At the same time, the currency volatility as a result of the domestic and international political environment has impacted commercialization of the 2016/17 crop, which is still below last year's pace.

Farmers in Mato Grosso have forward contracted 47.5 percent of their anticipated 2016/17 soybean production compared to 55 percent sold last year at this time. In Paraná, second largest producing state, the Secretary of Agricultural for the State of Parana (Deral) reported that farmers have sold 13 percent of their anticipated 2016/17 soybean production compared to 33 percent last year.

The retraction in forward contracts is based on expectations that the U.S. dollar will appreciate further in 2017, which may attract foreign purchasers to Brazil and push domestic prices up in Brazilian Reals due to the exchange rate.

TRADE

Export Forecast Increased to 58 mmt for 2016/17 Marketing Year (MY)

Post increased its export forecast to 58 mmt for the 2016/17 MY. The increase is due to the higher exportable supplies and the strong demand expected from China. The Asian country, Brazil's most important soybean market, is forecast to import over 3 percent higher compared to the previous MY. In addition, with current international prices and the U.S. dollar expected to appreciate further in 2017, Brazilian soybeans will be competitive for international buyers.

For the 2015/16 MY, Brazil exported 50.5 mmt between February-November of 2016. As a result, post reduced its export forecast for the 2015/16 MY to 51.2 mmt. China continues to be Brazil's main market, absorbing 75 percent of all Brazilian soybean exports so far.

CONSUMPTION

Export Markets for Soybean Meal and Oil to Support Higher Domestic Crush

Total domestic soybean crush for the 2016/17 MY is forecast at 41 mmt, one mmt higher than the previous MY. The higher crushing forecast compared to the 2015/16 MY is a result of higher demand for biodiesel domestically and higher foreign demand for soybean oil and meal. The sector is optimistic that demand overseas for soybean oil and meal will remain strong, especially in the Asian markets.