SÃO PAULO, BRAZIL — Drought conditions in key producing states are expected to reduce soybean production in Brazil in 2018-19, according to a Feb. 22 Global Agricultural Information Network report from the U.S. Department of Agriculture (USDA).

The USDA forecast output at 115.5 tonnes, down from the record 120.3 million tonnes a year ago.

The agency noted that the affected areas are expected to see soybean yields decline to 3.2 tonnes per hectare.

“Scarce rains and hotter-than-normal temperatures impacted the majority of the key producing areas in the last several months,” the USDA said. “The drought-like conditions began in November in the south of the country in the second largest producing state of Parana, as well as in the southern states of Mato Grosso do Sul and São Paulo.”

According to the late January estimate from the soybean producers’ association Aprosoja, most of the states are expected to see production reduced by between 5% and 30%.

The USDA also cut its soybean export forecasts for Brazil in 2018-19 to 70 million tonnes, a 16% reduction from the 84 million tonnes projected to be shipped in 2017-18.

Brazilian soybeans have been in hot demand in recent months as a trade war between the United States and China has caused the Chinese to seek alternative sources.

In December 2018, about 97% of Brazil’s total soybean exports were destined to China, surpassing the record share of 96% that went to China in November and 91% in September, according to Brazilian customs data.

By comparison, about 67% of Brazil’s exported soybeans were exported to China, on average, in that same fourth-month time frame from 2014-2017.