In its February World Agricultural Supply and Demand Estimates (WASDE) report, the U.S. Department of Agriculture (USDA) trimmed its estimate of current global soybean supplies by 11.4 million tonnes (MMT). Estimated carry-in supplies were reduced by 3.2 MMT, while global output also saw downward revisions to this past year’s U.S. soybean crop (-1.5 MMT) along with the upcoming Brazilian (-5 MMT) and Argentine (-0.5 MMT) crops. These changes for South America resulted in a 6.3 MMT reduction in output for non-U.S. major exporters. The release was the agency’s first since mid-December, and the changes highlighted the issues that have impacted the maturing South American soybean crops this winter. Despite the lower crop ideas, the USDA forecasts that world soybean production will increase by 21 MMT to reach about 361 MMT in the current 2018/19 marketing year. If realized, this would be another record for global soybean output and would be the sixth largest year-over-year rebound in world soybean output in the last nineteen years.
Brazil’s soybean crop has been at the forefront of the market when considering potential supplies. Early plantings and expanded soybean areas had many analysts looking for a third-consecutive record crop out of Brazil. However, dry conditions persisted in many key soybean growing areas for much of December through January, and the impacts of the dryness have been evident in recent crop estimates. For context, projections began this past fall for a crop near 120 MMT with the high water mark coming in December when USDA projected that Brazil would produce 122 MMT. Since then, crop ideas have been drifting lower with some private forecasters estimating that the crop will ultimately come in near 112 MMT. Official Brazilian crop watcher CONAB pegged this year’s Brazilian soybean crop near 115 MMT in its February release. The precipitation map that follows shows that much of Brazil has seen below average precipitation from early January through early February and this is indicative of the issues that have plagued the Brazilian soybean crop’s development. Recent rains have fallen, however, and are thought to have stabilized crop yields in areas that saw later planted soybeans.