Brazil soybean production set to reach record

04.11.2016
Brazil’s 2016-17 soybean production is forecast to reach a record of 101 million tonnes, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said in an Oct. 27 report. The soybean planted area is forecast at 33.7 million hectares. Producers are expected to slightly increase planted area compared to last year, but many are still concerned about the high cost of production, higher interest rates, difficulty accessing credit lines, and financial difficulties at the farm as a result of last year’s losses.
 
According to the FAS, the Brazilian real has appreciated by 25% against the U.S. dollar, since the beginning of 2016. This is rapidly changing the domestic price situation from just a year ago. After domestic soybean prices reached record levels in June, prices have come down significantly due to lower global prices and the Brazilian real appreciation.
 
Prices have decreased 19% between June and September, the beginning of the planting season. This situation has slowed the commercialization of the crop compared to last year, the FAS said. Producers are being more cautious with their selling strategy, expecting a rebound in prices later in the year.
 
In contrast to last year, the pace of commercialization is much slower due to producer’s expectations of a weaker exchange rate later in the year. Brazil’s 2016-17 soybean exports are forecast to be 57 million tonnes, the FAS said. Despite the lower commercialization pace, demand is still expected to remain strong in China, Brazil’s main soybean market.
 
According to the FAS, biodiesel production for 2017 is forecast at 4.4 billion liters based on a modest recovery of the Brazilian economy and the increase of the biodiesel mandate to 8%. In March 2016, the Brazilian government approved a law that increased the biodiesel-use mandate from 7% to 10% in 2019. The total domestic soybean crush for 2016-17 is forecast at 41 million tonnes. The higher soybean crush forecast compared to last year’s estimate reflects higher demands to meet new biodiesel mandates by the Brazilian government, the report said.
 
 

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