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October 11, 2019 | FBN Insights | Kevin McNew

Brazil’s CONAB’s Estimates: Less Corn, More Soybeans

Scenario can present opportunities for U.S. corn exports

Brazil’s CONAB’s 2019/20 Estimates: Less Corn, More Soybeans

On Thursday, Oct. 10 Brazil’s food supply and statistics agency, CONAB, released their 2019/20 production row crop estimates.  

Total corn planting, both first and second crop area is estimated at 17.53 million hectares (MHA) vs. 17.496 in 18/19.

Safrinha corn production, second corn crop, is estimated at 70.9 MMT vs. 73.1MMT in 2018/19.    

Total 19/20 corn production, first + second, is estimated at 98.393 million metric tonnes (MMT) vs. 100.04 in 18/19.  

19/20 corn exports are estimated at 34 MMT in 19/20 vs. 38 MMT in 2018/19.

Brazil soybean acres are estimated at  36.571 MHA vs. 35.874 MHA in 19/20.

Soybean production is estimated at 120.393 MMT vs 115.03 MMT in 18/19.

Soybean exports are estimated at 72 MMT vs 70 MMT in 18/19.

FBN’s Take On What It Means: CONAB is Brazil’s equivalent of the USDA and the market respects their numbers. The decline in Brazilian 19/20 corn production and exports is not a surprise to FBN and we believe this scenario can present opportunities for U.S. corn exports. CONAB’s soybean estimates are a reflection of forecasted improved crop conditions as the 18/19 soybean crop suffered through a drought. We believe that increased Brazilian soybean supplies and export estimates has the ability to present some headwinds to the US soybean program.                  

USDA’s October WASDE: Negative Corn, Bullish Soybeans  

The USDA’s October WASDE presented a bearish surprise for the corn trade as the government incrementally raised 19/20 corn yields by .2 BPA from the September report to 168.4 BPA.  Pre-report estimates were looking for a modest decline in corn yields to 167.5 BPA. 

The USDA lowered 19/20 demand by lowering exports and corn for ethanol.  

The adjustments to both the supply and demand categories brought the 19/20 carryout to 1.929 billion bushels (BBU).  This number is lower than the 2.19 BBU in September but higher than the pre-report estimate of 1.784 BBU.      

Soybeans received a bullish surprise as the USDA lowered yields by 1 BPA from the September report to 46.9 BPA.  Pre-report estimates were searching for a modest reduction of 47.3 BPA .

After adopting the September 1 stocks number, the USDA lowered the 19/20 soybean carryout to 460 MBU.  This is was a bullish surprise as the market was looking for a 521 MBU ending stocks number.   

FBN’s Take On What It Means For The US Farmer: We believe that the USDA’s corn estimates are a bearish input and should leave the market searching for bullish catalysts over the next month.  We also believe that the November WASDE’s yield and production estimate will be critical. We believe that the bullish surprise for soybeans is encouraging and has the ability to help establish a price floor in the markets.  Please contact your FBN farm market advisor (FMA) for more information about how to navigate these price scenarios.                           

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

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