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A new study found that deforestation in Brazil’s Cerrado region is hurting soybean production by causing drier weather that undercuts yields, Reuters reported Monday.
The study by research group Zero Carbon Analytics argues that clearing land in the vast tropical savanna creates a vicious circle, with falling yields spurring producers to clear more land. The Cerrado region occupies over 770,000 square miles, around 23% of Brazil’s land mass. It is the country’s second-largest biome after the Amazon.
The researchers concluded that the region would have produced an additional $9.4 billion in output, nearly 8% of its production in the 10 years covered by the study, if the land had not been cleared for soy since 2008, the report said. The researchers acknowledged that average soybean yields have risen, aided by improved seeds and other factors, but concluded that deforestation had been a drag on productivity gains.
“Our analysis isn’t denying that production has increased,” Joanne Bentley-McKune, the author of the study, told Reuters. “What is is showing is that production increases in spite of the climate losses.”
December Fed rate-cut hopes fading fast
Fed-funds futures traders are pricing in a roughly 43% probability of another quarter-point rate cut by the Federal Reserve next month, according to the CME FedWatch Tool. A December cut had a better-than-90% likelihood just a month ago.
Expectations took a hit after Fed Chair Jerome Powell warned at the conclusion of the last policy meeting that a December cut wasn’t assured given the “fog” created by the government shutdown. While a slew of data is set to begin hitting trader screens this week, Fed officials have increasingly sounded reluctant to press ahead given uncertainty around the inflation picture as they also weigh signs of slowing job growth.
With rate-cut odds back below 50%, the U.S. dollar firmed versus major rivals on Monday.
Notable closes
The soy complex roared back with a vengeance Monday, erasing the Friday selloff that followed USDA’s November crop production and supply/demand reports. President Donald Trump talking up the prospect of China soybean purchases and a scorching October soybean crush report from NOPA helped fuel the rebound.
January soybeans rose 32 3/4 cents to $11.57 1/4, hitting a 17-month high. December soybean meal rose $8.30 to $330.80, hitting a nine-month high, and soybean oil jumped 99 points to end at 51.14 cents.