Experts continue to lower forecasts for soybean harvest in Brazil

Consulting agency Itaú BBA, as a result of a sharp decrease in the soybean harvest forecast in Brazil's largest agricultural state of Mato Grosso by 20% to 40 million tons, has reduced the forecast of total soybean production in the country in 2023/24 MR by 5 million tons to 153 million tons compared to previous estimates t.

"If the forecasts come true, the soybean crop loss will be the largest in the state's history," Itaú BBA said.

Meteorologists predicted more rainfall in central-western and northeastern Brazil in early December, but rain fell below normal, raising the threat of crop failure in arid regions.

Against the backdrop of a decrease in the soybean production forecast to 153 million tons and a 3% increase in the consumption forecast, Itaú BBA experts estimated soybean exports from the country in 2023/24 at the level of 95-96 million tons.

At the same time, they expect that Argentina will harvest 50 million tons of soybeans in FY 2023/24, which, although it will correspond to the level of FY 2022/23, will still worsen the world balance. Global demand for grain and oil crops is expected to increase by 5% compared to last year, which will affect soybean quotes.

Heavy rains this week in central Brazil boosted soybean crops and sent January soybean futures down to $480.6/t, down 5% from last month.

In Ukraine, high export demand and a shortage of offers from producers support soybean prices at a high level. Exporters offer soybeans for 18,000-19,000 UAH/t or $450-470/t with delivery to the port, so processors have raised prices to 17,500-18,500 UAH/t with delivery to the factory.

The projected decrease in soybean prices in January may not happen due to uncertainty with the harvest in Brazil. But the improvement of weather conditions will contribute to the increase of production forecasts from a pessimistic 153 million tons to an optimistic 159-161 million tons, as in other analysts.