Grains –
On Thursday Brazil’s Conab issued a soybean production estimate of 102.4 mmt, and Friday WASDE followed along maintaining their 102 mmt production estimate. I thought it might be worth pointing out that both of these estimates seem to be implying a sub-trend national average yield. A chart showing the Conab national yield estimates since the early 90’s is attached along with the trendline. You can see this year’s Conab projection is slightly under the trend. Conab’s current yield estimate is for 3,022 kg/ha while the trend yield is closer to 3,080 kg/ha. If the national average yield were to increase to the trend level as shown, it would increase production by roughly 2 mmt using the Conab area estimate.
Up to this point, most would seem to agree that weather conditions in Brazil have been pretty favorable. In fact, some would argue that we could be working towards above trend levels for Brazil. I think the main area of concern for Brazil has been southern areas where rainfall totals have been lighter than usual. If rainfall improves in these regions going forward, we could certainly start to see more talk of above-yield potential for Brazil.
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