Brazilian soybean to produce 124 mil mt in 2019-20: INTL FCStone

Brazil is forecast to produce 124.01 million mt of soybeans in the 2019-20 crop year (September-August), up 1.9% on January estimates and 8% higher year on year, amid good harvest pace and productivity, according to commodities consultancy INTL FCStone.

Soybean harvest in 2019-20 reached 9% of projected area of 36.4 million ha in Brazil, as of January 30, up 4.8 percentage points week on week on favorable weather across the region, agricultural consultancy AgRural said on Monday.

Sufficient rains across the region in past few weeks have also raised the soy yield projections. According to the national crop agency Conab’s latest report, Brazilian soybean yield in 2019-20 is expected to rise 4% on the year to 3.32 mt a hectare.

According to FCStone, the estimated soybeans export in calendar year 2020 is forecast at 72 million mt, up 3% year on year.

However, according to market sources, Brazil’s total soy exports in 2020 could be revised lower because of China’s commitment to buy more US-origin beans to underline the January phase 1 trade deal pre-condition set by the administration of US President Donald Trump.

China committed to purchasing $36.3 billion worth of US agricultural products — including soybeans — in 2020 and $43.3 billion in 2021, under phase one of the trade deal, according to a collective statement released by the two governments.

Soybean purchasing is a vital cog in Sino-US phase one trade deal, since soybean comprises over 50% of annual US exports to China, while pork, beef and poultry comprise just 5%, 4% and 2%, respectively, according to the US Department of Agriculture.
RISING DOMESTIC CONSUMPTION

The domestic soy consumption is forecast at 48 million mt, up 7% year on year, FCStone said.

Greater domestic crushing demand and a higher biofuel mandate may limit Brazilian export growth in the coming months, market sources said.

According to the Mato Grosso Institute of Agricultural Economics, domestic soybean oil demand is set to increase significantly as the government mandates biodiesel blending.

Soyoil is the primary input for biodiesel production in Brazil, accounting for nearly 75% of the total, according to the December report of Brazilian soy crushers association, or Abiove.

Currently, diesel sold in Brazil contains 11% biodiesel and is known as B11, Abiove’s report said. This blend is scheduled to rise to 12% (B12) by March 2020 and touch 15% (B15) in 2023, the report added.

Apart from higher soybean oil consumption, Brazil’s domestic purchase of soybean meal has also increased.

As global demand for meat products rise, primarily fueled by the African swine fever-hit Asian markets, the trend of rising domestic soybean crushing demand is set to continue in Brazil, which needs the high-protein soybean-based animal feed to meet consumption demand from its cattle industry, sources said.
Source: Platts