In-Depth Look at South American Soybean Prospects

 

As the calendar turns to 2020, so too has the market’s supply focus swung from the recent U.S. harvest towards the prospects for the upcoming South American soybean crops. In this article, we will take an in-depth look at the latest planting progress, crop conditions and production ideas, along with a look at two key features that are expected to determine the desirability of soybean supplies in key exporters of Brazil and Argentina.

 

 

To refresh readers, the beginning of September typically marks the start of the earliest soybean plantings for farmers in South America. In Brazil, farmers must wait at least sixty days between the harvest of one soybean crop and the planting of another. This industry standard rule is intended to prevent the spread of fungal diseases, such as soybean rust, which can spread from one crop to the next. That period is dependent on the region and for this year, the starting date in Parana was September 11 while Mato Grosso farmers could begin seeding on September 15. Argentine soybean farmers must wait longer to begin seeding soybean fields and have traditionally begun seeding their crops in earnest beginning in November as the sun continues drifting further into the southern hemisphere, bringing with it longer and warmer days.

 

It is helpful to be reminded as to where key South American soybean production areas lie. The following maps show the dispersion of soybean production in Brazil and Argentina, along with each country’s major states’ percentage of output between 2014-16. One can see from the first map that the greatest portion of Brazil’s soybeans are grown in the center-west region, which includes nearly 30% of overall output in Mato Grosso. In general, production shifts to the southeast into Goias and Mato Grosso do Sul along with the far southern states of Parana and Rio Grande do Sul. The second map focuses on central and northern Argentina, where the nation’s soybeans are grown. Looking at Argentina’s recent soybean production output by soybean-producing district, Buenos Aires is the largest at just over one-third of the 2014-16 output, followed by Cordoba (28%), Santa Fe (13%), and Santiago Del Esterio (5%).

 

 

According to local Brazilian consultants AgRural, farmers had reportedly seeded 93% of intended soybean acres by December 5 versus 96% at the same time last year. AgRural reported that seedings were completed in Mato Grosso in early December, while progress was playing catch-up in the northeastern portion of the country in the Matopiba region consisting of the states of Maranhao, Tocantins, Piaui, and Bahia along with the far-southern Rio Grande do Sul.

 

 

Argentina’s Buenos Aires Grain Exchange (BAGE) also releases weekly planting and development updates throughout the growing season. The latest data as of December 25th pegged the seeding of Argentina’s 2019 first soybean crop at 89.8% complete. This was up 3.9% from the previous week and compared with 94% last year and the previous five-year average pace of 91.0%. 

 

The following maps show the latest 30-day precipitation anomaly for Brazil along with the latest seven-day forecast. The general bias for Brazil has been one of mostly below-average precipitation denoted by the rust-colored regions mostly favoring the eastern portions of the country. This same area is expected to receive considerable precipitation in excess of three inches over the first week of the new year. There also have been isolated pockets of above-average rainfall in Mato Grosso, Mato Grosso do Sul, Sao Paulo and Parana over the past month and these areas are expected to trend dryer in the beginning days of the new year.