Rains delay soybean harvest in South America and lower production forecasts

The active harvesting of soybeans in South America increases the supply in the global market, but the exchange quotes are still above the psychological level of $12/bushel.

Traders' attention is focused on Brazil and Argentina, where the soybean harvest will exceed last year's by 15-18 million tons in any weather conditions.

According to AgRural data, as of March 21 soybeans in Brazil are 69% harvested (70% last year), and harvesting is currently underway in the Matopibi region and the southern state of Rio Grande do Sul, where good yields have been recorded.

Second-crop corn planting in Brazil was completed earlier than last year, and the weather is generally favorable for crop development, although rainfall is lacking in Paraná state and southern Mato Grosso do Sul.

The representative of the USDA in Brazil lowered the forecast of soybean production in FY 2023/24 from 158.5 to 152.6 million tons (155 million tons in the March USDA report, 162 million tons last year) due to low yields in the central regions. At the same time, he believes that in 2024/25 MR, due to the recovery of productivity, soybean production will increase to 157.5 million tons.

In Argentina, 10 inches of rain fell last week, delaying the harvest and flooding some fields. According to the Rosario Chamber of Commerce, 8% of the country's corn is harvested (15% on average), and soybean harvesting has not yet begun. Dry and warm weather is expected in the coming weeks, which will speed up harvesting. Currently, 70% of soybean crops are under optimal moisture conditions.

The Buenos Aires Grain Exchange (BAGE) left its soybean crop forecast in Argentina at 52.5mt (50mt in March USDA report, 25mt last year), despite a recent wave of dry and hot weather. At the same time, FAS USDA experts lowered the forecast for the soybean harvest in Argentina in 2023/24 MR by 1 to 49.5 million tons.

May soybean futures on the Chicago Stock Exchange rose 1.4% to $12.9/bushel, or $444/t, after Friday's drop yesterday on forecasts of a reduced crop in Brazil.

Exports of soybeans from the USA in 2023/24 MR amounted to 36.55 million tons (out of USDA's forecast of 46.8 million tons), which is 8.4 million tons lower than last year's pace.

Traders are making speculative purchases of futures ahead of a report on inventories and acreage, hoping that the Outlook Forum's forecast of an increase in soybean acreage from last year's 83.6 million acres to 87.5 million acres will not be realized and that price gains will continue.