In Germany, UFOP reports that a bumper crop in South America has led to a strong increase in already ample global supply. Whereas consumption was only slightly up, supplies have grown significantly, putting downward pressure on soybean prices. In its March forecast, USDA raised its outlook for global soybean production in 2016/17 further. World output was estimated more than 4 million tonnes higher than the February forecast to 341 million tonnes, up just less than 9 per cent year-on-year.
The rise is due almost exclusively to the expected 4 million tonne increase for Brazil. Consequently, the country would harvest around 108 million tonnes, just less than 22 million tonnes more than 2015/16. The estimates for Argentina and Paraguay remained unchanged at 55 million tonnes and 9.2 million tonnes respectively.
However, market observers pointed out that production would likely be much larger than previously estimated, Agrarmarkt Informationsgesellschaft (AMI) reported. 2016/17 US production was seen unchanged at 117 million tonnes. Based on the bumper crops in the US and Brazil, expected global ending stocks were also raised to 82.8 million tonnes. This translates to an 8 per cent rise from 2015/16. Due to the even more abundant global supply, soybean futures prices came under substantial pressure, tumbling to the lowest level in nine weeks.
Category: Producer News