USDA trimmed its forecast for South American soybean production Wednesday, supporting traders’ expectations and a bump in futures prices..

As very dry weather in southern Brazil continues to impact yields, the forecast for Brazilian soybean production was lowered this year to 134 million metric tons, a 5-million-ton cut from the January estimate. The USDA, in its monthly World Agricultural Supply and Demand Estimates report, also reduced its forecast for Argentine soybean production by 1.5 million tons and trimmed the prediction for Paraguay by 2.2 million tons.

“You look across Brazil, Argentina and Paraguay and as recently as December those three combined countries were expected to have a total production of 203.5 million metric tons,” said Mac Marshall, vice president of market intelligence at the United Soybean Board and U.S. Soybean Export Council. “With all the cuts …. that total has gone down to 185.3 million tons.”

As of now, that’s an 18.2 million ton decrease in expected South American soybean production since December.

The February WASDE was an overall bullish report for soybean prices, but there was also some bearish news on the demand side. USDA cut its forecast for China’s crush and import demand and that, Marshall said, balanced out some of the production cuts for South America.

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The new USDA forecast for China’s soybean crush in the 2021-22 marketing year is 94 million tons, a 3-million-ton decrease from USDA’s forecast last month.

But prices for soybeans, meal and oil were all buoyed by the report that also predicted an increase in the U.S. crush by about 680,000 tons, or about 25 million bushels.

The March futures contract for soybeans rose by about 20 cents per bushel ahead of the WASDE report and that was sustained after it was released, Marshall said.

More good news for U.S. farmers can be found in the export columns of WASDE.

USDA slashed its export forecast for the Brazilian soybeans that are coming out of the ground now by 3.5 million tons. The new USDA forecast is for 90.5 million tons, down from the January prediction of 94 million tons.