Brazil Crop Forecast Raised
- Conab released its initial grain forecast for the new 2020/21 season at 279 million tonnes, up 8% from the previous year.
- Conab projects the coming year’s Brazilian soybean crop at a record 133.5 million tonnes, higher than USDA’s current projection of 131.0 million.
- The soybean forecast is up sharply from their estimate of this year’s crop of 120.9 million tonnes.
- The agency estimates next year’s soybean crop is already 40% sold by farmers versus new-crop sales at this time last year of 20%.
- Next year’s total corn crop is projected at 113 million tonnes, well above this year’s 101 million.
- Conab’s corn forecast is higher than USDA’s 107 million tonnes due to expectations for a 7% increase in planted area.
FBN’s Take On What It Means: Domestic corn demand from livestock feeders remains strong, and increased production will lessen the need for imports. Chinese demand and a weak currency along with the expectation of good weather are driving Brazilian producers to plant and produce more soybeans. If forecasts for Brazil’s production are met, expect supplies to limit future price gains.
China Buys More Corn And Beans
- In a daily export sales announcement, USDA reported China bought 408,000 tonnes of corn for shipment in the 2020/21 marketing year.
- China also purchased 204,000 tonnes of new-crop soybeans.
- USDA also confirmed private sales of 142,500 tonnes of soybeans to unknown destinations and 100,000 tonnes of corn to Japan.
- China’s purchases of US ag products over the first seven months of the year are at just 27% of the target value implied by the trade deal.
- US soybean exports to China typically rise in the fourth quarter of the year after US crops are harvested.
- Monthly loadings from the US to China during the fall have typically maxed out around 7.5-8.0 million tonnes per month.
FBN’s Take On What It Means: Chinese purchases remain well behind the pace needed to meet a first-year target of $36.5 billion specified in the deal, even after a recent surge in buying. The US has an export window open until February when Brazil will have enough beans to ship. However, logistical constraints will make it very difficult to ship enough to meet their obligations even if purchases are made.
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