USDA’s Foreign Ag Service (FAS) has significantly reduced its outlook for Argentina’s soybean harvest. Meanwhile, FAS has projected a large crop out of Brazil. Argentina’s projection comes in at 36 million tons, a whopping 9.5 less than the last USDA projection. Drought and ongoing hot and dry weather are essentially to blame but could diminish with the easing of La Niña conditions.
A smaller Argentinian crop could spell an opportunity for U.S. soybeans and soybean products. March soybean meal futures have been pushed to contract highs and have kept nearby months around the $15 per bushel mark. Brazilian estimates are projected at 125.5 million tons, half a million more than the last supply and demand report and up 8% from this time last year. So U.S. soybean demand could be fighting Brazil’s greater output to soak up the gap from Argentina. USDA’s next round of projections comes out on February 8.
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