The soybean (SB) planting in South America is progressing well with Brazil ahead of last year’s and its five-year mean and Argentina on par with its previous year. With the heavy rainfall in Brazil and Argentina in Nov (especially Brazil), La Niña hasn’t played out despite a peak of its intensity in 4Q21. Its impact remains to be seen in 1Q22 when the rainfall in South America usually drops off. If pegged with our views, the global SB price has passed its peak of US$16.6/bushel in May 2021 and will trade in a lower range of $13-15/bushel (even with La Niña impact in 1H22). We reiterate our HOLD call on TVO for a dividend yield of 6-7%.
Rainfall in South America despite the peak of La Niña in 4Q21
As of Nov 18, SB crop was 32% planted in Argentina, on par with the previous year. In Brazil, 52% was planted in Rio Grande do Sul and 95% planted in Parana. Overall, Brazil’s SB planting was currently 20% ahead of the 5-year mean and 25% above last year. We regard the SB planting progress in both countries as good despite the heavier rainfall in South America in Nov. In Brazil, there was widespread and heavy showers totaling 25-100mm in major SB production areas of central and northeastern Brazil and in large areas covering Mato Grosso, Goais and their neighboring locations in Nov, following the heavy showers in Oct which supported the early-season prospects for SB in key production areas of central and northeastern Brazil.