Soy powerhouse Brazil to seek another record crop in 2026, but by how much? -Karen Braun

Reuters

25-03-2025

NAPERVILLE, Illinois, March 25 (Reuters) - With the 2024/25 soybean harvest still in progress, no one is going to vehemently debate Brazil's 2025/26 production numbers right now.
But the discussion could be forced in just a few weeks when the U.S. Department of Agriculture publishes its initial 2025/26 projections, including global supply and demand ledgers where Brazil's soy crop is sure to make a statement.
Both USDA and its Brazilian counterpart Conab tend to initially underestimate the top exporter's soybean crop, having done so for seven of the last 10 years.
USDA's first official view of Brazil's 2025/26 output is due on May 12 and Conab's will come a few months later. However, USDA's Brasilia attache last week pegged the country's 2025/26 soybean crop at a record 173 million metric tons, up 2% on the year.
Official USDA figures and those from its attache do not necessarily have to jibe. This is interesting because for the past five years, USDA's first official estimate has come in above the attache's, and by an average of about 6 million tons.
Those differences have stemmed from both area and yield assumptions, though area has been tricky lately. USDA, its attache and Conab have all initially underestimated Brazil's soybean plantings for at least the past five seasons.
But how much further Brazilian soybean area needs to expand has come into question recently, especially amid a weak economic outlook for top bean buyer China.
HOW MUCH MORE AREA?
Brazilian soybean area has increased every year for the past 18 years, growing by 19% over the past four seasons alone. USDA's attache calls for a 1.9% area gain in 2025/26, the smallest yearly rise within what would become a 19-year streak.
The attache's forecast is more aggressive than its year-ago idea for a 1% area bump in 2024/25, which has since turned into 2.6%. The bigger gains laid out early this year could potentially prevent larger surprises down the road.
But the financial situation in Brazil is a bit more precarious than in recent years, when area really exploded. Three seasons ago, soy production costs for farmers in the top state of Mato Grosso jumped more than 50%, and they have come down only slightly since.
With the easing in commodity prices, Brazilian producers are expected to have less available capital in 2025, possibly slowing area conversion. The attache also reports increasing odds that more farmers may declare bankruptcy this season.
However, Brazil's weakening currency has insulated its farmers against global price declines to a larger degree than the U.S. producer, for example. In the last year, Chicago soybean futures have lost 17%, but they are down only 5% when priced in reais.
Brazil's Central Bank forecasts the real to remain near all-time highs both this year and next. This should keep Brazilian growers active in the global market and entice them to enhance investments if prices rise and production margins improve.
In the longer term, sowings are expected to continue an upward trend. Conab has estimated that by 2032/33, Brazil's soybean area and production could reach 56 million hectares and 186.7 million tons, respectively.
These numbers would have seemed unfathomable not too long ago, as Brazil's soy crop first exceeded 100 million tons only eight years ago.
USDA officially pegs the current 2024/25 harvest at 169 million tons, the same starting point it had nearly a year ago. Although that is record-large, global soybean stocks this year are not seen swelling to the previously burdensome predictions.
Next year could be a different story depending on what unfolds in the market.
But either way, Brazilian farmers will be planting their next – and likely record – harvest of soybeans just six months from now.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.