South American Crop Production Taking Center Stage

While the fall harvest has just begun in the U.S., it’s time to turn our focus to South America again for its upcoming crop season. I know the U.S. crop is not officially in the bin yet. Still, the primary window for weather volatility in the U.S. has closed, barring a widespread early frost or persistent rains that would inhibit harvest.

Last week, Conab, Brazil’s equivalent to the USDA, offered its first glimpse into the 2024/25 marketing year for soybean production. The agency forecasts the country’s output at 166.3 million metric tons (MMT), up 13 percent from the previous year. 

That is due to a 3 percent bump in acreage and a 9.6 percent yield improvement. Conab’s estimate did come below the USDA’s current forecast of 169 million metric tons, though that is common for the two agencies. Brazilian farmers have continued to boost planted acres annually, growing nearly 50 percent over the past decade. Conab’s current projection of 117.1 million acres would be the slowest year-over-year growth since the 2019/20 season.

The second half of the South America equation is Argentina. The Buenos Aires Grain Exchange currently forecasts Argentina’s 2024/25 soybean production at 52 MMT, up 1 MMT from the 2023/24 estimate. 

When combined, Brazil and Argentina’s total production could reach a record 220 MMT, or 8 billion bushels, 75 percent higher than what the U.S. is expected to produce. 

South America’s lofty estimates depend on the upcoming monsoon season, which Brazilian farmers rely on when planting most of the soybean crop in October. An abnormally dry season left Brazil in a historical drought that has slowed the current planting pace. 

Similarly, Argentina is facing the same drought issues. Much of Brazil’s drought concerns could be wiped out with an on-time start to the country’s wet season, according to Eric Snodgrass, principal atmospheric scientist with Nutrien Ag Solutions. Long-range forecasts have teetered on both sides of drier and wetter for the month. An on-time and plentiful monsoon will be critical to watch in the coming month.

Farmers have also begun planting corn in Brazil and Argentina. Conab forecasts Brazil’s 2024/25 corn production at 119.8 MMT, up 3.6 percent from the previous year. However, that was still below the record 132 MMT harvested two seasons ago. The USDA forecasts Argentina’s corn production at 51 MMT, up 10 percent from the Buenos Aires Grain Exchange’s 2023/24 estimate.

US Prices
Corn and soybean prices are currently undergoing a second weather market that is focused on global production rather than the U.S. Still, expectations of higher South American supplies continue to favor lower Chicago soybean prices. The U.S. and Brazil are expected to harvest a record soybean crop this season, which already had pushed new crop prices to contract lows in August. A new expected record in South American corn production is also a negative factor. 

Global competitiveness has been the name of the game. So long as Brazil has soybeans, China is buying them and sidelining the U.S. as best it can. This has shifted the burden to U.S. oilseed processors to meet demand requirements and for soybean meal and soy oil exports to remain competitive.

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