WASHINGTON, D.C., U.S. — The forecast for Brazil’s 2015-16 soybean production is increased to a record 100 million tonnes, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Services said in a March 4 report. The higher production is a result of an increase (by 200,000 hectares) in the reports estimate for planted area, to a total of 33.2 million hectares. The higher plated area is based on the latest estimate by the Brazilian Food Supply Company (CONAB). The higher production forecast is also supported by the good rains through February in the Center-West, which is expected to help yields.

In general, yields for 2015-16 are expected to be better than what was anticipated back in December 2015. The states of Parana, Rio Grande do Sul, Bahia, Goais, and Mato Grosso do Sul are all expected to have better yields compared to the 2014-15 season. In contrast, Mato Grosso and states in the northeast (Piaui, Maranho, and Tocantins) are expected to have lower yields compared to last year due to the dry and hot conditions early in the season. However, the national yield is forecast to be better than last year and reach 3.01 tonnes per hectare.

The market year 2015-16 soybean exports are forecast to reach 55.5 million tonnes, a record. The strong demand in China and the strong dollar will continue to incentivize exports. The dollar appreciated over 30% in relation to the Brazilian real in 2015 as a result of the economic and political crisis in Brazil. The real is not expected to recover much in 2016, making exports lucrative for producers despite low global prices.

The economic crisis and the weaker real, which has increased domestic prices for soybeans (and other commodities), have also made the federal and state government look for new revenues sources. As a result, soybean (and other commodities) exports have been targeted.

The domestic crush forecast for market year 2015-16 increased to 40.5 million tonnes and its market year 2014-15 estimate to 40.2 million tonnes, as a result of higher domestic and export demand. Soybean meal production increased in 2014-15 and is expected to slightly increase in 2015-16 due to the higher demand by the poultry and pork sectors. Soybean meal exports also increased in market year 2014-15 as a result of higher demand by Indonesia, Vietnam, and Thailand. Soybean oil is also contributing to the higher soybean crushing demand as a result of the higher domestic production of biodiesel.

In regards to biodiesel production, the Brazilian House of Representatives approved on March 4 an increase of 10% of biodiesel mandatory blending with diesel by 2019. The blending requirement would increase to 8% the first year once the law is implemented, then to 9% and 10%, respectively, by 2019.