Brazilian soybean production is expected to reach a record 171.5 million tons

The global soybean market is facing a year of high expectations and challenges, with climatic and economic factors playing crucial roles in the supply and demand dynamics. The International Monetary Fund (IMF) projection indicates a decline in global inflation from 4.2% to 3.5% in 2025. Despite this, the dynamics of monetary and trade policy in the United States, Europe, and major emerging markets continue to be a source of volatility for financial and commodity markets.

According to the latest market analysis from Hedgepoint Global Markets, Brazilian soybean production is expected to reach a record 171.5 million tons, driven by high yields in states like Mato Grosso, Goiás, Minas Gerais, and Bahia.

U.S. scenario and monetary policy

In the United States, concerns about persistent inflation and the potential impacts of the new administration under Donald Trump have led the U.S. Dollar Index to new highs. The USDA (United States Department of Agriculture) maintained the crop estimate at 118.8 million tons, which should allow for growth in exports and crushing. However, U.S. stocks are also expected to rise compared to the previous season, estimated at 10.3 million tons.

The Federal Reserve chose to keep interest rates unchanged after three consecutive cuts, signaling that a rate hike is unlikely in 2025. The Brazilian real, on the other hand, ended 2024 at a depreciated level, impacted by the strengthening of the dollar and Brazil's fiscal situation. The Monetary Policy Committee (COPOM) raised the Selic rate and indicated that further hikes may occur, potentially attracting more capital into the country. However, fiscal uncertainties continue to limit a more significant appreciation of the Brazilian currency.

Global markets watching for a new trade war

The resurgence of trade disputes also adds uncertainty to the global scenario. The imposition of tariffs by the U.S. on products from several countries, including China, Mexico, and Canada, has led to reactions and retaliations. Among the products targeted by Donald Trump's tariffs are agricultural commodities like coffee and ethanol.

The risk of an escalation in the trade war could impact Chinese demand for soybeans, as occurred in 2018 when China reduced U.S. soybean purchases due to tariffs imposed by both countries.

Soybeans: record production in Brazil and global uncertainties

Hedgepoint raised its estimate for Brazilian soybean production in 2025 to 171.5 million tons, driven by high yields in states such as Mato Grosso, Goiás, Minas Gerais, and Bahia. This should lead to a record volume of exports, despite uncertainties regarding domestic soybean oil consumption after the maintenance of the B14 biodiesel blend.

In the United States, the crop was kept at 118.8 million tons by the USDA, while crushing and exports are expected to grow in 2024/25. However, stocks are also likely to increase, adding pressure to prices.

In Argentina, the USDA reduced the production estimate, and further cuts could occur if weather conditions do not improve. With lower production, the country may reduce exports and crushing, benefiting by-products from Brazil and the U.S.

Outlook for the soy complex

After a period of neutrality, speculators have returned to taking "short" positions in soybean, soybean meal, and soybean oil futures contracts on the Chicago Board of Trade (CBOT), reflecting expectations of higher supply. Despite this, some factors may provide support to prices in the medium term, such as climate risks in Argentina and the possibility that the USDA is overestimating the country's production.

In the short term, strong prospects for global supply and a reduction in China's buying appetite are bearish factors, while political and climatic issues add volatility to the market. Furthermore, due to the current price scenario for soybeans and corn on the Chicago Board of Trade, it is likely that the USDA will indicate a smaller soybean area in the U.S. for the 2025/26 season, which could bring additional volatility to the market.

Climatic conditions and their impact on the market

Climatic influence remains on the radar for the global soybean market. The La Niña phenomenon is active and is expected to persist between February and April 2025, with a transition to neutral conditions between March and May. This movement may affect production and logistics in key producing regions.

By Luciana Minami / Revista Cultivar