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Conditions continue favorable for Brazilian cropsqrcode

Dec. 21, 2016

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Dec. 21, 2016
By Dr. Michael Cordonnier

Brazil Soybeans
- After a number of weeks of dry weather, the state of Rio Grande do Sul received rain over the weekend, but there was little rain in northeastern Brazil. The forecast looks favorable for more rain in southern Brazil, which would be a big help for the soybeans in the state, but the forecast is not quite as favorable for northeastern Brazil.
The state of Rio Grande do Sul in southern Brazil accounts for approximately 14% of Brazil's soybean acreage and the weather in the state has been dryer than normal for most of November and the first half of December. The region finally did receive some rainfall over the weekend, which relieved some of the dryness concerns at least for the time being. The soybeans in the state are some of the latest planted soybeans in Brazil (the soybeans in Rio Grande do Sul are 95% planted), so the crop was generally in vegetative development during the dry period so more rain will be needed going forward.
The farmers in northeastern Brazil are concerned that the weather pattern in their region of Brazil may be turning dryer. They had a generally favorable start to the growing season, but it looks now like they will be entering into a dryer pattern going forward. The soil moisture is still adequate in northeastern Brazil, but that may not be the case in 1-2 weeks if more rain does not materialize by the end of December. Northeastern Brazil accounts for approximately 10% of Brazil's soybean acreage.
There also continue to be some small dry pockets in Mato Grosso do Sul and Parana, but the dry pockets have been shrinking with the recent rains.
In contrast, Mato Grosso and other areas of central Brazil continue to get ample rainfall which is benefiting the soybean crop that is now setting pods and filling pods. The concern going forward might actually be that there might be too much rainfall. It has rained for five straight days in central Mato Grosso and the state has registered above normal rainfall for the last three months. During the first half of December, some areas have already received 7-8 inches or more of precipitation. If this trend continues into January, it could pose problems for the start of the soybean harvest. There should be a few early soybeans harvested in Mato Grosso before the end of December.
The soybean planting in Mato Grosso finished last week. Most of the main production areas were completely planted by mid-November, but the northeastern part of the state did not receive the early rains, so farmers in that region finished planting their soybeans last week. Many areas of the state finished planting 2-3 weeks earlier than last year with a few areas finishing as much as a month earlier than last year.
According to the Mato Grosso Institute of Agricultural Economics (Imea), farmers in Mato Grosso have forward contracted 47% of their anticipated 2016/17 soybean production compared to 55% sold last year at this time. During the month of November, farmers in the state sold 11% of their crop due to the weaker Brazilian currency. The average price for the soybeans sold thus far in Mato Grosso is R$ 67.40 per sack or $9.00 per bushel.
The Secretary of Agricultural for the state of Parana (Deral) reported that farmers in the state have sold 13% of their anticipated 2016/17 soybean production compared to 33% last year. Farmers in the state have been slow sellers in the hope of better prices due to further devaluation of the Brazilian currency. Deral is estimating that the soybean acreage in the state will decline 1%, but the total production will increase 11% to 18.3 million tons. The current price of soybeans in Parana is R$ 71.00 per sack or $9.50 per bushel.
The generally favorable weather in Brazil has resulted in increasing crop estimates in Brazil. Safras e Mercado increased their estimate of the 2016/17 Brazilian soybean crop last week to 106.1 million tons. Their previous estimate was 103.5 million tons. AgRural increased their 2016/17 Brazilian soybean production to 101.8 million tons last week. Their previous estimate was 100.4 million tons. They are expecting a nationwide soybean yield of 50.4 sacks/ha or 43.8 bu/ac. Last year's yield in Brazil was 47.8 sacks/ha or 41.5 bu/ac.
Brazil Corn - Approximately one-third of Brazil's corn production will be full-season corn while two-thirds of Brazil's corn production will be safrinha corn.
Farmers in southern Brazil will start to harvest their full-season corn in early January. The vast majority of the fill-season corn in southern Brazil is rated in good to very good condition. The Secretary of Agriculture in the state of Parana (Deral) is estimating that the full-season corn acreage in the state is up 18% to 490,000 hectares and that the full-season corn production in the state will be up 30% to 4.3 million tons.
The current price of corn in Parana is approximately R$ 29.00 per sack or $3.87 per bushel. Farmers in the state have only sold 5% of their anticipated corn production due to declining prices. They are hoping for higher priced due to the possibility of further weakening of the Brazilian currency.
According to the Mato Grosso Institute of Agricultural Economics (Imea) farmers in Mato Grosso have sold 31% of anticipated corn production which is up 6% over the past month. Last year at this time, some farmers in the state had already forward contracted as much as 60% or more of their anticipated corn production. The average price of corn in Mato Grosso during the month of November was R$ 18.60 per sack or $2.50 per bushel. Conab stated in their December Crop Report that they expect the corn price in northern Mato Grosso to be $2.00 to $2.30 per bushel in June of 2017 when the safrinha corn harvest gets underway.
I think Brazilian farmers will increase their safrinha corn acreage due to the potentially early soybean harvest. The relatively low corn prices though may convince farmers to cut back on inputs in order to hold down on costs.


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