Soybean prices did not respond to another decline in the crop forecast for Brazil

Due to the prolonged drought in Mato Grosso and Parana states, which are the main agricultural regions, StoneX experts sharply lowered the forecast of soybean harvest in Brazil in 2023/24 MY from 161.9 to 152.8 mln tonnes, which is 3.2% lower than the record 157.7 mln tonnes harvested in 2022/23 MY. Due to the decline in production, the forecast of soybean exports from the country was reduced from 103 to 95 million tons.

According to StoneX, most of the country’s fields had irregular rains, including in the main grain-producing state of Mato Grosso, where the yield will be 14% lower than last year.

The forecast of the total corn production in Brazil in 2023/24 MY was lowered from 126 to 124 mln tonnes, primarily due to the decrease of the harvest in the northern and northeastern regions. In comparison with the estimates of December, the forecast of the first corn harvest was reduced by 2.4% to 25.8 mln tonnes, and the second – by 0.8% to 96.6 mln tonnes. Delayed sowing of soybeans may lead to the fact that a significant part of the corn of the second crop will be sown later than the optimal time.

March futures for soybeans on the Chicago stock exchange yesterday rose 0.3% to 469,2 $/t (-3.4% for the week, -4.1% for the month), but they remain under pressure from declining demand for soybean oil from the biofuel industry in the United States.

The EIA’s monthly report showed that soybean oil use in biofuel production decreased from 1.602 billion pounds in September to 1.207 billion pounds in October, a 6-month low. The use of canola in the production of renewable diesel fuel in October decreased by 4 million pounds to 165 million pounds, and corn oil – by 52 million pounds to 248 million pounds. At the same time, total biodiesel production increased by 9 million gallons to 2.079 billion gallons, and renewable diesel production by 153 million gallons to 3.587 billion gallons.

Tags: Brazil, prices, soybean, crop forecast