Brazil soy crop, exports revised up on strong yields, demand

SAO PAULO (Reuters) - Brazilian soybean farmers are looking at another strong year after a drought in Argentina and international trade tensions involving the United States and China boosted prospects for the country’s oilseeds industry.

FILE PHOTO - Soy plants are seen in a farm in Sao Desiderio, Bahia state, Brazil March 21, 2018. REUTERS/Roberto Samora

Brazil is expected to export a record 72 million tonnes of soybeans this year, up from 68 million tonnes last season as a drought damaged Argentina’s grains and China’s potential retaliation of U.S. protectionism caused Brazil soybean premiums to widen in relation to prices in Chicago, Andre Pessoa, partner at consultancy Agroconsult, told a news conference on Tuesday.

Farmers will produce almost 119 million tonnes of soybeans this season as yields grew in key regions and in spite of a lack of rains in the south, which damaged the crop in states like Rio Grande do Sul, he said.

“Had the weather been as perfect as last year’s, Brazil’s soybean crop would have surpassed 120 million tonnes,” he told a news conference to present findings of a crop tour organized by the firm which started in January and ended last week.

“Part of the premiums over Chicago being paid for the soy in Brazil are related to Argentina,” he said. There is also “increased appetite for Brazil soy from China” related to the potential escalation of a trade war opposing the world’s largest soy importer and the United States, one of the largest producers.

“Though tensions may rise, Brazil and Argentina are not in a position to increase supplies to China overnight. Nor is China in a position to stop buying U.S. soybeans at once,” he said referring to strong demand from that country’s crushing industry which cannot be immediately replaced.

In the beginning of the season, there were concerns related to the La Nina weather phenomenon, the analyst said, adding that climate-related worries subsided during the season. “This scenario signaled the crop would be smaller, but eventually production and yield surpassed our expectations”.

Brazil, the world’s largest soybean exporter, produced a record 114.6 million tonnes last season, according to Agroconsult’s estimates.

Average yields at national level rose to an estimated 56.5 bags per hectares this year from 55.8 hectares in the last harvest, Pessoa said.

Agroconsult’s tour passed by 13 of Brazil’s top grain-producing states, corresponding to 95 percent of the soybean area and 72 percent of the corn area, it said.

Another leg of the tour, focusing on the second corn crop, will begin in May and end in June.

Reporting by Ana Mano; Editing by Chizu Nomiyama and Lisa Shumaker