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Huge Brazil soy crop estimates for 2023 may not be excessive

Brazil will not start planting its next soybean crop until later next month, but the world’s top producer and supplier seems well-positioned to chip into U.S. export share over the next year based on staggering harvest pegs.

Although the numbers are hefty, early market estimates for Brazil’s crop have tended to be on the conservative side in recent years, excluding last year’s drought cycle. That downfall allowed U.S. exporters this year to snag a five-year-high share of world soybean trade.

The U.S. Department of Agriculture officially pegs Brazil’s 2022-23 soybean harvest at 149 million tonnes, up from 126 million a year earlier, but other estimates are more aggressive. That includes 154.5 million tonnes from consultancy Safras & Mercado, and 152.6 million from StoneX.

That compares with Brazil’s two largest crops of 128.5 million and 139.5 million tonnes in 2019-20 and 2020-21, respectively.

These large harvest estimates would reflect another step up in production from recent levels, though they may not be unreasonable since gains had been steeper mid-last decade.

Recent market predictions for Brazil’s next soy crop imply little to no concern with farmers’ ability to obtain necessary fertilizers, which had been jeopardized following top fertilizer exporter Russia’s invasion of Ukraine. Brazil imports about 85% of its fertilizer needs.

A fertilizer shortage would likely curb yield potential, but Brazil seems to be getting what it needs. Brazil’s recent imports have jumped above average levels and include record volumes of potassium chloride from Canada, another leading fertilizer exporter.

Brazil had negotiated with Russia to secure fertilizer shipments amid supply uncertainty earlier this year despite pressure from Western sanctions. As of this week, fertilizer supplies from Russia, outside of ammonia, have returned to near-normal levels.


Brazil’s soybeans are usually dependable because of high seasonal rainfall in most growing areas, though the 2021-22 harvest was a rare exception given extreme drought in the south. That crop, collected in early 2022, fell about 13% from pre-planting ideas, the biggest shortfall in at least 15 years.

But aside from that outlier, the industry has been under-estimating Brazil’s crop potential in recent years, and that appears to be rooted more in yield assumptions than area expansion. USDA’s forecasts around this time of year have been similar to those of other analysts in recent years, so those will be used below for ease of comparison.

In the five seasons prior to 2021-22, USDA’s August outlook for Brazil’s soybean yield was too low by an average of 7%. Comparing with U.S. units, those estimates averaged 3.7 bushels per acre lower than the final.

In many of those years, the extra production was discovered through what had seemed like unreasonably high Brazilian export volumes. It even prompted agencies like USDA and Conab to overhaul their soybean stock assumptions a few years ago.

Average Brazilian yields are now larger than U.S. ones, and that growth can be attributed to many of the same factors that boosted U.S. yields last decade, including technological advances and improvements in management practices.

Strong profit potential has encouraged Brazilian farmers to rapidly increase soybean area in the last decade or so, and that expansion has supported the production gains in recent years more so than rising yields.

If Brazil harvests the record 42 million hectares of soybeans USDA has slated for 2022-23, area will have risen nearly 20% in just five years. That 6.9 million-hectare expansion is equivalent to the combined area of soybeans planted in the U.S. states of Illinois and Indiana in 2022.
Source: Reuters (Editing by Matthew Lewis)

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