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September 08, 2020 | FBN Insights | Kevin McNew

Brazil Soy Production Expected Higher

Brazil Soy Production Expected Higher

  • Conab, Brazil’s government agriculture agency, will release its next crop report on Thursday, September 10. 
  • The report will include seven years of revised crop production, including an increase to 124.5 million tonnes for last year’s crop.
  • Brazil's soy harvest for the 2020/2021 season is forecast to increase 5.8% from the prior crop to 131.7 million according to a poll of analysts.
  • The average of forecasts is also up by 1 million tonnes from the previous consensus in late July.
  • Projections for planted area average 38.11 million hectares, or 94.2 million acres.
  • Safras & Mercado has reported that 65 million tonnes of the 2020/21 soy crop had already been contracted for sale. 

FBN’s Take On What It Means: Soybeans in Brazil have higher profitability compared to corn and cotton and are even taking over areas previously planted with sugar cane in some states. Expectations for record planted area and higher yields are leading to increased production forecasts. If realized this elevated production will likely keep a lid on soybean prices. 

Australia Crop Forecast Higher

  • Australia’s government agricultural agency ABARES raised its forecast for wheat production during the 2020/21 season by 8.4%.
  • Wheat production for the year ending June 30, 2021, will total 28.91 million tonnes, up from its June estimate of 26.67 million tonnes.
  • Increased production in New South Wales has accounted for 60% of the forecast increase.
  • Other areas in the west and north are still in need of greater rains.
  • The expected increase in Australian wheat production will weigh on benchmark prices, which hit a five-month high last week.
  • ABARES forecast barley output during the 2020/21 season will total 11.2 million tonnes, up from its estimate of 10.6 million in June.
  • The agency raised its canola production forecast to 3.4 million tonnes from its June estimate of 3.2 million.

FBN’s Take On What It Means: Heavy rains across the east coast have helped production rebound from three years of drought induced production shortfalls. Australia/China relations have been strained recently, resulting in China effectively banning Australian barley imports. There is concern that China’s increased appetite for wheat imports will not lead to an increase in trade with Australia, and increased production will add to world ending stocks which would weigh on prices. 

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