USDA slashes South American crop estimates: Argentina’s soybean and corn production cut due to drought, while Brazil faces harvest delays from excessive rain. What does this mean for global feed markets and dairy farmers? Find out how these changes could impact your operation.
Summary:
The USDA’s February 2025 WASDE report shows that Argentina and Brazil have faced tough weather, leading to cuts in their soybean and corn production. Argentina’s crop problems are due to drought, while Brazil’s crops are delayed by rain. This might cause feed prices to go up, affecting dairy farmers. While there’s still plenty of global feed, it’s smart for farmers to watch market trends and think about strategies like locking in feed prices and adjusting animal diets to save money and keep their operations stable.
Key Takeaways:
- Due to adverse weather conditions, the USDA cut soybean and corn production estimates for Argentina and Brazil.
- Argentina’s production decreases due to one of the driest Januarys on record, while Brazil’s harvest is delayed by excessive rain.
- Despite these challenges, Brazil’s soybean production remains at a record-high level.
- Due to these production cuts, feed costs for dairy farmers may increase marginally, affecting corn and soybean meal prices.
- Global feed supplies remain sufficient, mitigating potential shortages and severe price hikes.
- Dairy farmers are advised to consider hedging strategies and adapt feed rations to manage potential volatility in feed prices.
- Maintaining awareness of global market trends and weather patterns is crucial for dairy farmers to navigate potential impacts on their operations.
The USDA’s February 2025 World Agricultural Supply and Demand Estimates (WASDE) report, released on February 11, 2025, has significantly reduced soybean and corn production forecasts for Argentina and Brazil, potentially impacting global feed markets and dairy operations.
Key Production Cuts
Argentina faced the most substantial reductions:
- Soybean production estimate cut by 3 million metric tons (MMT) to 49 MMT
- Corn production forecast lowered by 1 MMT to 50 MMT
Brazil also saw adjustments:
- Corn production estimate reduced by 1 MMT to 126 MMT
- Soybean production forecast remained unchanged at a record-high 169 MMT
These changes are reflected in the following table:
| Country | Crop | 2024/2025 Forecast (MMT) | Change from January 10 (MMT) | Change from 2023/2024 (MMT) |
|---|---|---|---|---|
| Argentina | Soybeans | 49.0 | -3.0 | 0.8 |
| Argentina | Corn | 50.0 | -1.0 | 0.0 |
| Brazil | Soybeans | 169.0 | 0.0 | 16.0 |
| Brazil | Corn | 126.0 | -1.0 | 4.0 |
Weather Woes
The cuts stem from contrasting weather patterns across South America:
- Argentina experienced one of the driest Januaries on record, severely impacting crop development
- Brazil faced relentless rains, particularly in Mato Grosso state, delaying soybean harvest and planting of the safrinha (second) corn crop
As of February 9, 2025, farmers in Mato Grosso had harvested only 27.5% of their 2024-25 soybean crop, significantly behind last year’s 45.4% at the same time.
Impact on Global Supply
As the world’s top exporter of soybean meal and third-largest corn exporter, Argentina’s production cuts could ripple through global supply chains. However, Brazil’s stable soybean output may help offset some losses.
U.S. Crop Outlook
The USDA made minimal changes to the U.S. balance sheets for corn and soybeans:
| Crop | 2024/2025 Price Forecast | Change from January 10 | Change from 2023/2024 |
|---|---|---|---|
| Corn | $4.35/bushel | +$0.10 | -$0.20 |
| Soybeans | $10.10/bushel | -$0.10 | -$2.30 |
| Wheat | $5.55/bushel | No change | -$1.41 |
U.S. Ending Stocks
| Crop | Feb 2025 (Million Bushels) | Avg Estimate | Jan 2025 | 2023-24 |
|---|---|---|---|---|
| Corn | 1,540 | 1,537 | 1,540 | 1,763 |
| Soybeans | 380 | 382 | 380 | 342 |
| Wheat | 794 | 800 | 798 | 696 |
World Ending Stocks
| Crop | Feb 2025 (MMT) | Avg Estimate | Jan 2025 | 2023-24 |
|---|---|---|---|---|
| Corn | 290.3 | 293.1 | 293.3 | 317.5 |
| Soybeans | 124.3 | 128.5 | 128.4 | 112.4 |
| Wheat | 257.6 | 258.7 | 258.8 | 267.5 |
Implications for Dairy Farmers
Feed Costs
The most immediate concern for dairy farmers is the potential impact on feed costs:
- Corn Prices: The U.S. corn price forecast increased by 10 cents to $4.35 per bushel. This could lead to marginally higher feed costs, but the global corn supply remains ample, which should help moderate any price increases.
- Soybean Meal: With Argentina’s reduced soybean production, protein supplement costs for dairy rations could rise. However, Brazil’s stable soybean production may help offset this impact.
Feed Availability
Despite production cuts in South America, global feed supplies remain abundant and relatively inexpensive. This is positive news for dairy farmers, as it suggests that feed shortages are unlikely in the near term.
Long-term Planning
Dairy farmers should consider the following when planning for the coming months:
- Hedging Strategies: With the potential for feed price volatility, farmers might want to consider locking in feed prices for the coming year to protect against possible increases.
- Ration Adjustments: If soybean meal prices increase significantly, farmers may need to explore alternative protein sources or adjust their feed rations to optimize costs while maintaining milk production.
- Crop Diversification: For dairy farmers who also grow their feed crops, the weather-related challenges in South America highlight the importance of crop diversification and resilient farming practices.
Milk Prices
While the WASDE report doesn’t directly address dairy markets, changes in feed costs can indirectly impact milk production costs and, consequently, milk prices. If feed costs remain stable or increase only slightly, it could help maintain favorable margins for dairy operations.
Expert Analysis
“Farmers are harvesting their soybeans between showers and at high moisture levels to guarantee that the crop is put in storage before more rain keeps [farmers] out of the field,” reported the Soybean and Corn Advisor.
Looking Ahead
More rain will be needed in Argentina to avoid additional yield cuts. Meanwhile, the quality of Brazil’s soybean crop remains uncertain due to high moisture levels during harvest.
As the situation evolves, dairy farmers should closely monitor market trends and be prepared to adjust strategies to maintain profitability in the face of potential feed market fluctuations.
Learn more:
- Is 2024 Shaping Up to Be a Disappointing Year for Dairy Exports and Milk Yields?
- Unveiling the USDA Milk Report: Find Out Which States are Leading and Lagging!
- Global Dairy Market Trends July 2024: Australia’s Rise as Argentina and New Zealand Face Challenges
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