USDA Leaves Brazil's Soybean Crop Forecast Unchanged, Exerting Pressure on Prices

USDA Leaves Brazil’s Soybean Crop Forecast Unchanged, Exerting Pressure on Prices

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USDA Report Overview

In its latest World Agricultural Supply and Demand Estimates (WASDE) report for April, the United States Department of Agriculture (USDA) surprised the market by maintaining its forecast for Brazil’s soybean crop, contrary to market expectations. Analysts had anticipated significant revisions to global production and inventory estimates, but the USDA’s decision to leave the forecast unchanged added pressure on soybean quotes.

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Key Changes in Soybean Balance

The April WASDE report revealed several notable changes in the global soybean balance for the 2023/24 fiscal year:

  • Initial reserve estimates were reduced to 101.31 million tons due to adjustments for the 2022/23 marketing year.
  • Global production forecasts saw a slight reduction to 396.73 million tons, with decreases in South Africa offset by increases in Paraguay.
  • Brazil’s soybean harvest forecast remained unchanged at 155 million tons, despite analysts’ expectations of a lower figure.
  • World consumption estimates were reduced to 381.08 million tons.
  • Forecasts for world exports and imports were also adjusted, reflecting changes in supplies and demand from various regions.

Market Reaction and Futures Trading

Following the release of the report, May soybean futures on the Chicago Stock Exchange experienced a 0.5% decline to $426 per ton, signaling a 2.9% decrease compared to March’s data. November futures for the new harvest traded at a lower price of $427.8 per ton, reflecting concerns about an increased US harvest.

Rapeseed Production and Canola Futures

In addition to soybeans, the USDA also adjusted forecasts for world rapeseed production and exports. Despite these changes, May canola futures fell by 2.4% to CAD 624.2 per ton or $455 per ton. This decline may potentially boost Canadian canola supplies to the EU market while increasing pressure on canola prices in Europe.

The USDA’s decision to maintain Brazil’s soybean crop forecast in its April report has stirred market dynamics, contributing to fluctuations in soybean prices. As traders continue to assess global supply and demand factors, the soybean market remains sensitive to developments in key producing regions and export destinations.