Brazil soybean harvest threatened by extreme weather

• Weather risks in Brazil: Excessive rainfall in central and northern regions and drought in Rio Grande do Sul are pressuring analysts to cut Brazil’s soybean crop forecasts below 180 million tonnes.
• Robust US processing: US January soybean crushing hit a record 6.03 million metric tons, up 10.6% year-on-year, underscoring strong processing demand despite some weather-related disruptions.
• Rising US oil stocks: Soybean oil inventories in the US jumped 49.1% year-on-year to 861,800 tons, the highest in nearly three years, signaling ample supply.
• Export competitiveness: US soybean oil exports for 2024/25 surged 304% to 1.1 million tons, enhancing US presence in global vegetable oil markets and capping upside for Black Sea exports.
• Market tone: Overall impact is neutral to bearish for Black Sea soybeans as Brazil’s weather concerns are offset by strong US supply and exports.

Brazil Soybean Harvest and Weather Overview

Brazil’s soybean harvest reached 25% completion as of February 14, in line with last year but behind the five-year average. Progress is uneven across key producing states, with Mato Grosso well advanced while Minas Gerais, Paraná, and Mato Grosso do Sul lag. Adverse weather remains a major factor: excessive rainfall is hampering fieldwork in central and northern Brazil, while persistent heat and drought in Rio Grande do Sul threaten yield potential. If dry conditions continue in the southern state for another two weeks, further deterioration in oilseed yields is likely. As a result, several analysts have already cut Brazil’s soybean production estimates below 180 million tonnes, though final figures are still pending.

US Soybean Crushing and Oil Inventory

The Oilseed Processors Association of America (NOPA) reported record January soybean crushing volumes of 6.03 million metric tons, a 10.6% increase year-on-year. Despite this strength, crush was 1.5% lower than December’s 6.12 million metric tons, reflecting temporary disruptions from severe winter weather at some facilities. Expanded processing capacity and solid demand for meal and oil continue to underpin high utilization rates across the US crushing sector.

US soybean oil inventories rose sharply to 861,800 tons at the end of January, up 15.7% from December’s 744,800 tons and 49.1% above the prior year’s 577,900 tons. This marks the highest stock level in nearly three years and reflects both strong crush volumes and softer demand from key buyers, particularly China. At the same time, US soybean oil exports for the 2024/25 season climbed 304% to 1.1 million tons, highlighting robust competitiveness in international markets despite elevated domestic stocks.

Market Impact and Outlook for Black Sea Soybeans

The overall impact on global soybean markets is neutral to bearish for Black Sea exporters. On one hand, Brazil’s weather-related production risks could support international soybean prices if yields in Rio Grande do Sul deteriorate further. On the other, record US crush, rapidly rising soybean oil stocks, and a 304% surge in US soybean oil exports point to ample North American supply and strong US competitiveness. This combination may cap price upside and limit export opportunities for Black Sea soybean meal and oil into traditional markets. Traders should closely track Brazil’s weather over the next two weeks, as any confirmed yield losses could tighten global balances and offer tactical price support opportunities.

Source: Market Data