I know… I know. I’m about to talk about the winter weather again. While it’s snowing in Chicago, we’re not even going to look out the window. We have to go to our live streams down in South America. Turns out that a lot of people were wrong again.
The headlines here in the U.S. are centered on the impact of the recent winter chill. The thing is: No one knows what the impact of the weather will be until we actually see the crop. It’s easy to speculate and picture in our mind a world where supply is tight and prices are high.
But reality always has a way of forcing us to snap back from these dreams. For all the chatter about delays in planting in key soybean producing regions of Brazil, it doesn’t seem to matter. There is a ton of soybeans about to head through the supply chain.
The 2017/18 soybean crop will be the second-largest ever in Brazil. Ports are about to get flooded, and China will likely be a major buyer. With 86.23 million acres of soybeans planted this year (despite the weather delays), the crop size is not far off from the record set last year of 114 million metric tonnes.
The total harvest is expected to hit 110.19 million metric tonnes. That figure is an upward revision from the 109.43 MMT discovered in a Reuters survey two months ago.
The news will act as a weight on soybean prices ahead of Friday’s WASDE report. We want to keep an eye out on what the USDA now says about ending stocks given the bumper crop down in the Southern Hemisphere.
Brazil’s 2017/18 soybean crop seen second-biggest in history
Sao Paulo | Reuters – Benefited by good weather, Brazil’s 2017/18 soybean crop, which farmers are now beginning to harvest, is expected to surpass 110 million tonnes, the second-largest in history, according to the average of 11 forecasts in a Reuters poll on Friday.
Farmers here are likely to collect 110.19 million tonnes of the oilseeds this season, above the 109.43 million tonnes from a previous Reuters poll in November and below last year’s all-time record of 114 million tonnes.
Planted area is expected to reach 34.90 million hectares (86.23 million acres) based on the average of forecasts, also a historical record as soy advanced over areas previously planted with corn this summer.
Practically all forecasters either revised projections upwards or kept estimates for yet another bumper harvest in Brazil, the world’s largest exporter of soybeans, poll data showed.
Farmers started sowing their soy in September but because of a drought in certain regions the work only gathered steam the following month.
This may potentially delay harvesting in certain areas, analysts say.
“For the time being, the general conditions are very good for the crop,” said Flávio França Junior, partner at consultancy firm França Junior Consultoria.
In Rio Grande do Sul rains returned after a drought, with analysts not expecting major damage to the crop there.
“Even with delays in planting … currently the conditions are very favorable and the weather is contributing to a positive outlook,” said an analyst at INTL FCStone.
Through Jan. 19, Mato Grosso, Goiás, Paraná and the northern farming frontier of Matopiba may receive accumulated rain volumes surpassing 100 millimeters, according to data from the Agriculture Weather Dashboard.
In Rio Grande do Sul, though, rains are not expected to surpass 34 millimeters in the period.
Corn farmers will reduce area and output this year as prices of the cereal have lagged, forecasters said.
The area planted with corn in the Brazilian summer is expected to drop by 11 percent in the 2017/18 period from the prior cycle, to 4.88 million hectares, causing production to fall 17 percent to 25.27 million tonnes, they said.
Demand for the cereal in the face of a smaller crop is expected to shore up prices of corn domestically to an average between 31 reais ($9.58) and 32.90 reais per bag, up from 30 reais in the previous season, according to projections from Rabobank.