John Deere combine in Brazil harvesting soybeans

(Photo: Iowa Soybean Association / Aaron Putze)

Brazilian numbers mixed

March 14, 2024 | Jeff Hutton

All eyes continue to be focused on Brazil following the latest report from the U.S. Department of Agriculture’s (USDA) World Agricultural Supply and Demand Estimates (WASDE).

Domestically, the outlook for U.S. soybean supply and use for 2023/24 was unchanged in the latest WASDE report, according to the USDA’s Dr. Mark Jekanowksi. While soybean crush was unchanged, the soybean meal extraction rate increased slightly, and higher soybean meal exports were mostly offset by lower domestic use. The U.S. season-average soybean price and the soybean meal price forecasts were unchanged for 2023/24. The soybean oil price is reduced 2 cents to 49 cents per pound.

The U.S. ending stocks were listed at 315 million bushels, unchanged from last month's estimate.

What about Brazil?

But global soybean production was reduced 1.4 million tons on lower production for Brazil and South Africa. Global 2023/24 soybean supply and demand forecasts include lower beginning stocks, lower production, lower crush, higher exports and lower ending stocks compared to February. Beginning stocks were lowered 1.4 million tons on historical crush and import revisions for China. Soybean crush for China was raised for 2020/21 to 2022/23 based on a review of in-country estimates and supplies. Soybean imports for China for 2022/23 are also raised to reflect shipping data by major exporters.

In a press conference held just prior to the release of the March WASDE numbers, Jekanowksi says global soybean production for 2023/24 was reduced on lower production for Brazil and South Africa. The key number from the WASDE was that soybean production for Brazil was lowered 1 million tons to 155 million on harvest results in Parana and poor weather conditions in São Paulo offset by favorable conditions in the north and Rio Grande do Sul. South African soybean production is lowered 400,000 to 2.1 million on lower yield prospects. Global crush is reduced for Brazil and South Africa on lower supplies, and lower for Ukraine on higher soybean exports. Global soybean exports are raised 3 million tons on higher shipments to date from Brazil and Ukraine. Soybean imports are raised on higher imports for China, which are now 500,000 tons higher than the prior marketing year’s revised estimate. Global soybean ending stocks are lowered 1.8 million tons to 114.3 million on lower stocks for Brazil that are partly offset by higher Chinese stocks.

“This is something that should have been bearish in market tone,” says Kristin Stein, a grain marketing advisor for Ever.Ag. “Because economic data was released on the same day, the value of the dollar dropping had a greater impact on that day’s trade.”

On Brazil's lowered soybean production estimate, USDA says "Soybean production for Brazil was lowered to 155 million on harvest results in Parana and poor weather conditions in São Paulo offset by favorable conditions in the north and Rio Grande do Sul."

But despite drought and weather conditions to finish out 2023, the USDA says South America is still sitting on a big crop. USDA's latest WASDE report released last Friday made minor revisions to the South American crop production estimates. 

Perhaps more interesting is the difference in numbers between the WASDE report compared to that of the CONAB estimates released a few days later. CONAB is Brazil’s crop reporting agency.

While the WASDE reported Brazil soybean production at 155 mmt, CONAB’s estimates were listed at 146.8 mmt – roughly 8 mmt lower.

“The USDA and CONAB continue to be at odds in regard to Brazilian production and the latest report enhances that,” Stein says. “CONAB has been known to change their opinions on yield a lot more frequently than the USDA does, so the disparity isn't a huge shock. If Brazil is really having production issues, wouldn't their harvest bean basis stay neutral to strong? Instead, we continue to see a widening basis - an indicator that buyers are happy with the supplies they are receiving during harvest.”

 “Over the next six months, Brazil’s soybeans are likely to dominate the international market,” says Farm Futures grain market analyst Jacqueline Holland. “The market was hoping USDA would make more significant cuts to the 2023/24 Brazilian soybean production. But in recent weeks, some of my fellow analyst friends have told me that their Brazilian farmer sources have been quiet about yields during harvest. And if feedback from the field has taught me anything, you clam up when you’re on track for good yields.”

Iowa Soybean Association District 4 Director Marty Danzer says he is suspect of the numbers coming from Brazil.

“When I look at Brazil, I think they’ve got a better crop than they’re letting on,” he says. “It’s going to be a challenging year, but we’ll see what these markets tell us.”

Right now, Danzer says he’s focused on the weather in Iowa and what that might offer in terms of overall crop figures on his fields.

“We need steady rains if we’re going to be productive here,” he says.

Fellow ISA District 6 Director Robb Ewoldt says he looks at private sector numbers when it comes to Brazil and other foreign producers.

“In my past experience, I would look more at what private companies are saying,” he says, pointing to entities like StoneX and others who are also tracking the numbers. “I just put more weight into the private sector compared to the USDA or CONAB.”

Ewoldt says while Brazil has seen its fair share of poor weather, the bigger story may be that Brazil is planting more to make up for any potential losses from existing acres.

“What we do know is that they are adding acres down there every year,” he says.

But like Danzer, Ewoldt is mainly focused on moisture levels here in Iowa and what the future holds this season and beyond.

“For the first time in a few years, we had some standing water in our fields,” he says, pointing to this week’s rainfall that fell. “And believe me, I’ll take it!”