Mumbai, 07 Oct (Commoditiescontrol): Concerns over drought conditions in key South American soybean-producing regions have raised alarms about potential production shortfalls in 2025. However, the global soybean market is likely to see limited price upside, as ample global stocks are expected to cushion any sharp increases. While the dry weather in Brazil and Argentina presents significant risks to their upcoming harvests, strong global supplies are providing a buffer against substantial price hikes.
In Brazil, the prolonged drought in central and northern regions has already led to significant delays in soybean planting. As of late September, only 0.5% of the intended area in Mato Grosso, Brazil's largest soybean-growing state, had been sown—far below the typical 4-6%. Farmers now face the difficult decision of planting in dry soils or waiting for rains, which could delay both soybean and subsequent safrinha corn harvests. Mid-October rains are forecasted, but there are concerns they may not be enough to fully restore soil moisture levels. La Niña conditions are expected to persist, bringing a high probability of below-average rainfall through the planting season.
Despite these weather challenges, Brazil’s soybean production is still projected at 164 million tonnes (Mn T) for the 2025 season, slightly lower than some estimates of 166-172 Mn T. While the uncertainty has added some risk premium to the market, the global surplus is expected to prevent any significant price spikes.
In Argentina, similar drought conditions are impacting crop development. Some regions have gone 80-100 days without meaningful rainfall, jeopardizing the planting of corn, sunflowers, and, soon, soybeans, which will begin later in October. The current estimate for Argentina’s 2025 soybean crop stands at 51 Mn T, but this could be revised down if drought conditions persist.
Global Surplus Dampens Price Risk
Although South American production concerns are real, the global soybean market remains well-supplied. World production for the 2024/25 season is expected to increase by 28.2 Mn T, pushing total supplies to a record 529.5 Mn T. Despite rising demand for soybean crushings, projected to grow by 19 Mn T to 349.6 Mn T, global ending stocks are forecasted to rise by 16.7 Mn T to 124.3 Mn T.
This global surplus is likely to cap any significant upward pressure on soybean prices, even in the face of potential production losses in Brazil and Argentina. Futures markets have already priced in some weather-related risks, but the upside for soybean prices remains constrained by the ample global supply.
Price Outlook Hinges on South American Weather
While global stockpiles will likely limit sharp price movements, the outlook for soybean prices will remain closely tied to developments in South America. Should the forecasted rains fail to materialize or if drought conditions worsen, especially in Argentina, production could fall further, potentially pushing prices higher. Conversely, if weather improves, market sentiment may shift downward, easing any concerns over supply disruptions.
(By Commoditiescontrol Bureau; +91-9820130172)
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