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March 11, 2015

Conab Lowers Brazilian Soy Estimate by 1.3 Million Tons to 93.2

In their latest monthly report released on Tuesday, Conab reduced the 2014/15 Brazilian soybean estimate by 1.3 million tons to 93.2 million (-1.4% compared to February). The nationwide soybean yield is estimated at 2,976 kg/ha or 43.1 bu/ac. The lowered production is the result of dryness in central Brazil that occurred during the pod filling period of the early maturing soybeans. The major soybean producing state that was hardest hit by the adverse weather appears to be Goias in central Brazil. Even though the rainfall increased during the month of February in Goias, it was not enough to compensate for the losses that mounted in January.

The combination of a delayed soybean harvest and a trucker strike at the end of February resulted in a significant reduction in Brazil's soybean exports during the month of February. Conab reported that only 867,000 tons of soybeans were exported in February, which is a decline of 65% compared to the 2.8 million tons of soybeans that were exported in February of 2014. China was responsible for 71.5% of Brazil's soybean exports in 2014.

A very significant factor of Brazilian soybean farmers has been the drastic weakening of the Brazilian currency over the last several months. At the close of trading on Tuesday, March 10, the real was trading at 3.12 reals per dollar, which is the weakest it has been since 2004. The weakening currency is in reality a price increase for Brazilian farmers. As a result, domestic soybean and corn prices have risen since the first of the year in Brazil despite slumping international grain prices.

As far as the Brazilian corn estimate is concerned, Conab only reduced the 2014/15 corn production slightly to 78.2 million tons (-2.3% compared to last year). They estimated the full-season corn crop at 29.7 million tons (-6.1% compared to last year) and the safrinha corn crop at 48.4 million tons (+0.2% compared to last year). The safrinha corn crop now represents 62% of Brazil's total corn production.

The safrinha corn acreage is estimated at 9.0 million hectares or 2.2% less than in 2014. The safrinha corn yield is estimated at 5,381 kg/ha (82.8 bu/ac) which is 2.4% more than last year's yield of 5,254 kg/ha or 80.7 bu/ac.