Rains are improving prospects for Brazil's soybean crop, putting pressure on prices

According to the AgRural agency, as of February 29, soybeans in Brazil have been harvested on 48% of the area, which is 5% higher than last year's pace, despite periodic rains. 86% of the planned areas (70% last year) were sown with second-harvest corn in the central-southern region.

The rains are improving the prospects for the harvest, so StoneX analysts have increased the forecast of soybean production in the country in 2023/24 MR by 1.2 million tons to 151.5 million tons, which is slightly lower than last year's figure of 154.6 million tons.

The forecast revision is due to better-than-expected soybean yields in the states of Goiás, Marañano, Tocantins, Piauia, Pará and Bahia, where several weeks of rain have improved the condition of the crops, especially late ones.

The StoneX soybean export forecast remained at 93 million tons, domestic consumption at 57.5 million tons, and the ending stocks estimate was increased from 2.06 to 3.25 million tons.

At the same time, the corn production forecast was reduced by 100,000 tons to 124.4 million tons (131.9 million tons last year), in particular, corn of the second harvest - to 96.33 million tons due to the reduction of sowing areas in Minas Gerai state. But strong planting rates and favorable weather could lead to higher production estimates.

May soybean futures on the Chicago Stock Exchange yesterday fell 0.5% to $422.2/t (-5% for the month) on the back of improved weather in South America and weak export rates from the US.

According to the USDA, for February 22-29, the export of soybeans from the USA decreased to 1.02 million tons, and in total in the season amounted to 34.2 million tons, which is 25% inferior to the corresponding indicator of the previous season - 42.75 million tons.

Traders expect that in the March report USDA experts will reduce the forecast of soybean production in Brazil by 1.3-3.2 million tons (156 million tons in the February report). As a result of improved weather, production may decrease less, which will collapse the quotation.

In Ukraine, export demand prices for soybeans with GMOs fell by $10-15/t to $400-420/t or UAH 17,800-18,200/t with delivery to Danube and Black Sea ports, as importers began to receive cheaper soy from Brazil with a higher protein content. Demand prices for soybeans without GMOs do not exceed $420-430/ton.

Processors, against the background of a decrease in offers, left prices at the level of UAH 16,500-17,000/ton with delivery to the factory.