Expected loss of soybean crop in South America in excess of 14 million tonnes this 2020/21 season

Drought, frost, hail, labor strikes and likely reduction of export quota will have a relevant impact on the soybean offer from South America this 2020/21 season.

In Brazil, the projected output was revised from 135 to 128 million tonnes due to climatic issues, a reduction of 7 million tonnes. Despite the Brazilian growth output in comparison to the season 2019/20, it is not enough to meet the growing global demand.

In Argentina, climatic issues in addition to labor strikes will have a projected impact of also 7 million tonnes reduction, from 53 to 46 million tonnes.
In Uruguay and Paraguay, market is also expecting reduction of output due to climatic issues. In addition, the political situation in Argentina coped with the rise of domestic food prices may be the trigger for the Government to establish export quotas and reduce the offer of soybean in the international markets as done by this same political coalition in the past.

All in all, there are strong concerns of soybean offer growing less than the growth of world demand, what may partially explain the strong price rises in Chicago in this beginning of year.