BRASILIA, BRAZIL — Recent floods in southern Brazil and lower yields across several states have lowered the country’s soybean production expectations to 150 million tonnes in marketing year 2023-24, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA).

In its July 1 Global Agricultural Information Network report, the FAS revised its estimate 2.6 million tonnes lower, or 2%, compared to its March report. The reduction is due mainly to May’s unprecedented floods in the southernmost state of Rio Grande do Sul and lower yields in Mato Grosso, Mato Grosso do Sul, Paraná and São Paulo. Revised national yields are at 3,275 kg/ha (48.7 bushels per acre), 3% lower than the March report, and 10% behind 2022-23 record productivity that saw 162 million tonnes of production.

Amid lower soybean output and solid gross crushing margins, the FAS reduced its export estimates to 94 million tonnes, while increasing crush volumes to 55.1 million tonnes in 2023-24 to meet domestic demand. Crush volumes are being supported by an increased biofuels blend mandate, attractive gross margins, and Argentina resuming its high levels of soybean crushing and world-leading exports, FAS said.

“This may reduce the incentives for Brazilian crushers to export processed products, particularly soy oil, redirecting its supply to domestic consumption,” the FAS said.

Domestic soybean consumption is pegged at 58.75 million tonnes in 2023-24 and 59 million tonnes in 2024-25.

The FAS revised upward its 2024-25 soybean area forecast by 650,000 ha to 46.3 million, mostly due to an increased 2023-24 baseline area estimate. This new projection maintains a 1% area increase from the previous report. If confirmed, this would represent a slowdown in Brazil’s soybean area expansion as average yearly growth had been at nearly 4% over the last decade.

Production for 2024-25 is now seen at 160 million tonnes, up 2.5 million tonnes, or 2%, from the previous report. Despite increased costs, farmers are continuing to invest in quality seeds, inputs and fertilizers to improve yields rather than expanding area, the FAS noted. Yields across the country are forecast at 3,456 kg/ha.

The FAS maintained its soybean exports forecast at 99 million tonnes in 2024-25. The main reasons include sustained international demand, mostly from Asia; higher harvested volumes; a favorable exchange rate; and higher competitiveness compared to other competitors, such as the United States.

From the demand side, China’s soybean purchases remain strong, with February to May 2024 imports at 29.5 million tonnes. This is close to the 31.5 million tonnes registered during the same period in 2023 in which Brazil supplied 70% of the volume (20.6 million tonnes), and the United States supplied 26% (7.5 million).