Brazil’s soybean crop seems to be shrinking. Estimates by AgResource Company released earlier this month showed a soybean crop under 120 MMT, and it’s another slash to crop estimates that are now at a level not even USDA has touched yet.
“We saw a 7.5 MMT cut by the USDA to the Brazil crop. I think the market is trading well beyond that, maybe in the 120 or slightly under range. I think the key is, though, that’s a pretty large cut for one month, and they had a dramatic cut the month before as well,” says Chip Flory, host of AgriTalk. “The USDA usually takes a more conservative approach to that. And the fact that they’ve cut it so dramatically the last couple of months, the market probably has it right in that 120 MMT range, would be my guess.”
Arlan Suderman of StoneX Group says a customer survey shows a crop at the 121.2 MMT range, but he says the key is as the survey is taken each month, the crop continues to be revised lower.
“I’d say USDA needs to start catching up. The fact that they’re making big cuts, it just shows how bad it is down there. Farmers are not selling. And I think the biggest evidence of how bad it is, is the fact that we’ve gone through a period we’re in the middle of harvest, where their basis at the ports was stronger than U.S. Gulf. And so that’s why we had the big weekly export sales report come out this week during that period of time, huge soybean sales, because we were the cheap source,” says Suderman.
Chip Nellinger of Blue Reef Agri-Marketing says the biggest takeaway from USDA’s revised numbers last week is the fact the world’s supply of soybeans is shrinking.
“The fact that China is rushing almost on a daily basis to buy our new crop beans, I think is evidence of what Arlan mentioned,” adds Nellinger. “Our beans are already more competitive with South America. And then you throw this whole Ukrainian thing in there. There’s untold issues, some of which we haven’t even thought about. Can Urkaine get the crop in the ground? 76% of the world Sun oil exports come from there, among a lot of other things. And so it’s just a major disruption and end users are scrambling right now.”
