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By Raphael Galo, Head of Agribusiness and Structured Operations at A7 Capital
For the U.S. producer looking at the 2025-26 crop after USDA’s WASDE reports resumed, the outlook for soybeans and corn in South America still appears “comfortable” in the official numbers, but once you dig into weather, costs and domestic demand, the safety margin looks much thinner than the headlines suggest.
In Brazil, soybean numbers keep climbing. CONAB’s second crop survey projects a record area of about 49 million hectares (+3.6% from the previous crop), with production estimated at 177.6016 million tons in 2025-26, slightly below the 171.4817 million tons of the 2024-25 cycle. USDA’s November WASDE, in turn, works with a Brazilian crop of 175 million tons, domestic use close to 63.3 million and exports around 112.5 million, cementing the country’s role as the world’s main supplier. These figures rest on still-reasonable conditions in Brazil’s Central-West, but behind them sits a more complex weather mosaic: climate reports point to a La Niña influence from late 2025 onward, with a tendency toward above-normal rainfall in parts of the Central-West and North, but a risk of irregular or below-normal volumes in southern Brazil and parts of Argentina and Paraguay, along with temperatures consistently above historical averages. That raises the odds of localized pockets of crop disappointment, especially in Rio Grande do Sul, Paraguay and northern Argentina, even if the national picture still looks comfortable.
In Mato Grosso, the main producing state, market reports show a soybean crop essentially fully planted (about 96.36% of area seeded, according to IMEA on Nov. 17, 2025), with good stand establishment in most regions. However, there are reports of spot replanting because of heavy rains or brief dry spells that created localized stress. The fast-planting pace supports expectations of more than 48-49 million tons of soybeans in the state, according to regional estimates, in line with CONAB’s view of a record national crop. At the same time, total production costs in Mato Grosso remain high: official cost-of-production estimates point to total outlays around R$8,000 per hectare (about US$1,506 per hectare at the Nov. 17, 2025, exchange rate) for the 2026-27 crop, with some relief on inputs such as seed and fertilizer, but higher operating and financial costs that keep margins tight at current price levels. That squeeze explains the defensive stance among many growers, who forward-sold a large portion of last season’s crop but are more cautious with 2025-26 sales, waiting for better windows in Chicago and in the foreign exchange market.
On the demand side, Brazil combines aggressive soybean exports in grain form — more than 100 million tons shipped between January and October 2025, with China accounting for more than 90% of monthly volumes at times — with growing domestic use. Meal demand remains strong, supported by record beef slaughter, rising hog and poultry slaughter and higher milk production, according to IBGE, which translates into solid feed demand across feedlots, hog and poultry operations, and dairy cooperatives nationwide. At the same time, a new biofuels policy is reinforcing demand for soybean oil: Brazil’s National Energy Policy Council raised the mandatory biodiesel blend in diesel from B14 to B15 as of Aug. 1, 2025, pushing projected biodiesel consumption to about 9.8 million cubic meters (+8-9% from 2024) and soybean-oil use to nearly 8 million tons. In parallel, the ethanol blend in gasoline was increased from 27% to 30% as part of an official strategy to reduce dependence on imported gasoline. In practice, this means a growing share of Brazil’s soybean crop is being locked in domestically through biodiesel and, increasingly, through renewable diesel and sustainable aviation fuel, or SAF, while meal and whole beans continue to anchor exports.
For corn, Brazil’s picture is one of high output but a much tighter balance once supply and demand are combined. CONAB’s second survey points to total production of about 141 million tons in 2024-25, with a small downward adjustment to about 138.8 million tons in 2025-26, despite increased area in both first and second crops. The decline comes mainly from more modest yield expectations after recent records. USDA’s November WASDE, however, projects 136 million tons for 2024-25 and 131 million for 2025-26 — in other words, a more cautious view of Brazil’s production potential. In both readings, the core point is the same: domestic use is growing rapidly. CONAB pegs Brazilian corn consumption at about 90.6 million tons in 2024-25, more than 7% growth year over year, with an additional 4-5% increase expected in 2025-26, driven by feed demand and, above all, the corn-ethanol boom. Official and industry reports indicate that ethanol from corn already accounts for roughly 20-25% of Brazil’s total ethanol output, having reached a bit over 8 billion liters in the Center-South in 2024-25, with strong expansion projected over the next decade as mandated ethanol blends rise and new plants come online.
This structural growth in domestic corn demand helps explain why, even with robust exports, Brazil’s balance sheet is not as loose as headline volume suggests. Trade data show shipments near 6.5 million tons in October and more than 23 million accumulated between July and October 2025, but projections for the 2024-25 cycle call for exports of around 40 million tons — and somewhat above that in 2025-26 — against a backdrop of rising internal consumption. At the ports, this translates into tighter basis: export-parity prices in the Central-West often run several reais below domestic cash prices, indicating that the internal market — especially corn-ethanol plants and feed mills — has become the main sponge for supply. In Mato Grosso, the state ag economics institute reports cash corn prices around R$46-47 per 60-kilogram sack in November, with B3 futures trading higher and export parity in the R$37-40 per-sack range, underscoring that domestic demand is supporting the market.
In Argentina, the picture is one of recovery with meaningful risks. After severe crop failures in 2022-23 and a still-uneven 2024-25 season, the Buenos Aires Grain Exchange and other local agencies project a total grain harvest of roughly 142-143 million tons in 2025-26, led by corn (about 58 million tons, +18% from the previous crop), while soybeans are expected to come in around 48-49 million tons, slightly below the prior season, mainly because of an estimated 4.3% reduction in area (totaling about 17.6 million hectares). In its most recent updates, the Buenos Aires Grain Exchange highlights delayed soybean planting: only about 13% of the area was sown by mid-November, compared with more than 20% at the same time last year, because of excess rainfall in parts of the core region and delays in Buenos Aires province. Initial production potential for soy sits near 47 million tons, but with significant uncertainty, as excessive moisture coexists with pockets of moisture deficit and heat in other areas. For corn, the situation is almost the mirror image: the same exchange reports planting progress around 36-37% of area, above last year, with good conditions in the fields already established, supporting projections for a strong crop. Overall, Argentina is reemerging as a relevant competitor in corn and soybean products (meal and oil), but the combination of La Niña, waterlogged soils in parts of the region and a recent history of sharp crop losses keeps weather risk above normal until the season is fully made.
Paraguay, meanwhile, is emerging as a quiet pivot in South American soy. International official reports project Paraguayan production at around 10.9 million tons in 2025-26, recovering from last season’s losses because of more favorable weather and modest gains in area and yield. Most of that volume still goes to export, either as whole beans or via crushing in plants in Paraguay itself, Brazil and Argentina. The country, however, faces structural challenges: rising costs, limited infrastructure, heavy reliance on river transport for exports and the need to adapt to regulations such as European Union deforestation rules, which could reshape regional soybean trade flows. Even so, a full Paraguayan crop adds seasonal downward pressure in a market already dependent on the Brazil-Argentina axis, reinforcing the idea that any supply shock in one of these players can be partially offset by the others.
From an international price standpoint, the recent environment has been one of explosive moves in Chicago. Soybean rallies — triggered by Chinese buying headlines, South American crop adjustments or technical buying — have at times pulled corn and wheat higher as well. Still, the November WASDE again cooled the bullish momentum by maintaining a view of reasonably comfortable global stocks. At the same time, South America keeps gaining share in global soybean trade — recent analysis shows the region consolidating control over the bulk of world exports — while China continues to diversify origins but remains heavily dependent on Brazil, Argentina and, to a lesser extent, Paraguay. In Brazil, domestic soybean cash prices in many regions are below what growers consider attractive relative to full production costs, which explains the slower pace of forward selling for the new crop, despite record shipments of the old one. The Brazilian real, which has strengthened since the start of the year, is also eroding export premiums in local currency, making FOB opportunities less compelling at the farm gate.
It is also important to remember that in China, the world’s largest soybean importer, port soybean stocks have clearly been rising year over year. At the end of October, stocks climbed from about 5 million tons in 2023 to about 8 million in 2024 and about 10 million tons in 2025. By mid-November, volumes rose from about 6 million tons in 2023 to about 7 million in 2024, reaching just over 10.3 million tons in 2025. This shows that Chinese ports are operating with record inventory levels for this time of year.
Finally, there is a policy and data component that cannot be ignored. In the United States, the end of the latest budget standoff only secured federal funding through early 2026, and there are indications that a full normalization of USDA’s publication calendar could face delays, precisely when the market needs reliable data to guide decisions. At the same time, Washington is debating tariff reductions on goods not produced domestically, such as coffee, signaling that trade and fiscal policy can quickly redraw the map of agricultural flows — a useful reminder for soybeans and corn, even if they are not at the center of these measures for now.
See you soon,
Raphael Galo
