Brazil's government crop supply agency forecast record soybean output of 90.03 million tonnes on Tuesday, near the top of its previous forecast of 87.9 million to 90.2 million tonnes, as farmers finish planting new fields.
If confirmed, the crop would surpass last season's record 81.5 million tonnes by 10.5 percent, and the South American country could overtake the United States as the world's top producer of the oilseed for the 2013/14 crop year.
Area planted with soy expanded by 6.2 percent from a year earlier as farmers chose the crop over alternatives such as corn, the agency, Conab, said in its third monthly estimate of the season.
January soybeans on the Chicago Board of Trade were bid 0.09 percent higher at $13.45 per bushel on Tuesday.
Conab said irregular rainfall earlier in the season in the principal center-west region had given way to a good overall climate as soy plants enter their growth and flowering stage. Soy planting nationwide is about 95 percent complete.
A caterpillar previously unknown in Brazil, the helicoverpa armigera, is forcing farmers to use more pesticides than usual in most producing regions, raising costs but not yet threatening output, Conab said.
Brazil's wheat crop forecast rose 11 percent to 5.36 million tonnes, up from 4.81 million tonnes in November, due to favorable weather in top producing state Rio Grande do Sul. Conab said the state may have its highest-yielding crop ever, also helped by new pest-resistant crop technologies.
The sharp increase in the wheat forecast is surprising, given that the harvest is in its final stages and Conab had reported damage from frosts that hit southern Brazil in July. If the forecast is confirmed, Brazil's wheat output would increase 22.4 percent from the previous year, reducing import needs slightly.
In the 2012/13 crop year that ended July 31, Brazil imported 7 million tonnes of wheat and exported 1.68 million tonnes. In 2013/14, Brazil will need to import 6.7 million tonnes but will only export 500,000 tonnes, Conab estimated.
The agency also forecast a 2013/14 corn crop of 78.8 million tonnes, in line with the 78.5 million to 79.8 million tonnes forecast last month.
Brazil's corn output comes increasingly from the second of two annual crops; the second is planted around February after soybeans are harvested. Conab did not calculate a forecast for the second 2013/14 crop and instead used the record 2012/13 second crop output of 46.2 million tonnes to tabulate its full-year estimate.
The second corn crop could shrink significantly as farmers have little incentive to plant corn due to a national surplus and low prices. Some farmers are instead contemplating a second soybean crop.
For the second straight year, Brazil's soy exports, estimated at 45.9 million tonnes, will likely surpass domestic consumption of 40.5 million tonnes, helping to replenish global stocks. Corn exports will likely fall to 18 million tonnes in 2013/14 from 22.5 million tonnes a year ago, Conab said.
The market relied on Brazil's record corn crop last season, briefly making it the top global exporter of both soybeans and corn, but the United States is expected to export more corn in 2013/14.
Conab's forecast for the 2013/14 cotton lint crop was left unchanged at 1.6 million tonnes, up from 1.3 million tonnes a year earlier, as farmers favor planting the textile amid low corn prices.