Soybean prices did not react to another cut in Brazil's crop forecast

As a result of the prolonged drought in the states of Mato Grosso and Paraná, which are the main agricultural regions, StoneX experts sharply reduced the forecast for the soybean harvest in Brazil in 2023/24 from 161.9 to 152.8 million tons, which would be 3.2% less than the record 157.7 million tons collected in 2022/23 MR. As a result of the reduction in production, the forecast for the export of soybeans from the country was reduced from 103 to 95 million tons.

Rains were irregular in most of the country's fields, including in the main grain-producing state of Mato Grosso, where yields will be 14% lower than last year.

The forecast for total corn production in Brazil in FY 2023/24 has been lowered from 126 to 124 million tons, primarily due to reduced yields in the northern and northeastern regions. Compared to December estimates, the forecast for the first corn harvest was reduced by 2.4% to 25.8 million tons, and the second - by 0.8% to 96.6 million tons. The delay in sowing soybeans may lead to a significant part of the second corn the harvest will be sown later than the optimal terms.

March soybean futures on the Chicago Stock Exchange rose 0.3% to $469.2/t yesterday (-3.4% for the week, -4.1% for the month), but they remain under pressure from lower demand for soybean oil from the US biofuels industry.

The EIA's monthly report showed soybean oil use in biofuel production fell from 1.602 billion pounds in September to 1.207 billion pounds in October, a six-month low. Canola use in renewable diesel fell 4 million pounds to 165 million pounds in October, and corn oil use fell 52 million pounds to 248 million pounds. At the same time, total biodiesel production increased by 9 million gallons to 2.079 billion gallons, and renewable diesel fuel production increased by 153 million gallons to 3.587 billion gallons.