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Brazil Starts 2016 Soybean Harvest Next Week

Once a renowned paradise in terms of rain for farmers in Brazil, the state of Mato Grosso has faced an atypical landscape with irregular rainfall levels in the heart of the soybean production areas combined with an excess of moisture in other top-producing southern states.

As a result, very significant crop losses could be occurring in Brazil and a strong turnaround for soybean prices. The answer for the first estimation may be yes, but on the second issue there is more certainty.

The Mato Grosso Institute of Agricultural Economics reduced its estimate for output in the state to nearly 30 million metric tons to less than 29 million metric tons of soybeans during the 2015/2016 crop season, confirming at least 1 million tons in losses. Considering the country as a whole, private consultancies forecast a crop ranging from 95 to 99 million metric tons, a strong fall given the fact that some previously foresaw a Brazilian output of over 100 million tons.

For Frederico Schmidt, an analyst with Priores Investimentos, the behavior of soybean prices will depend a lot on the other side of the pendulum: China. “Even if all of the losses are confirmed, we still will have a big crop of 95 million tons. The big weight is on other side with China releasing weak economic indicators, slower economic growth. Rains are expected in Mato Grosso, not big news for the markets, but the worrying thing is that China's industrial activity has been shrinking for 10 consecutive months. So, I say that the markets should watch the weather (in Brazil), until the crop is defined. The price will be volatile with China pushing beans down,” says Schmidt in an interview with Agriculture.com.

Back to Mato Grosso's weather, the legal planting period, which is an imposition to avoid more plagues, was extended to January 15 because the rains forced farmers to delay planting or replant in some areas. The president of the Association of Corn and Soybean Growers of Mato Grosso, Endrigo Dalcin, described that the state was affected at the heart of the soybean production by the El Niño phenomenon with isolated rains in some plots of land with more dryness in the Eastern and Northern regions.

“Nobody expected this. We have a history of good rains, but the weather was very irregular this time. In the North of Mato Grosso, where planting takes place first, there was no rain during the reproductive stage, so losses were not reversible. Next week, the harvest starts in those areas and we see how much lower the yields will be. In the East, planting had to be delayed and the losses can be recovered if the weather helps. The forecast says that it will help,” says Dalcin. 

Farming in the Eastern Mato Grosso city of Canarana, Arlindo Cancian planted nearly 2,220 acres of soybeans from October 27 to November 27. In that planting month, he did not see over two days of rain in his field. At the 40 days after planting, there were about 500 acres without a single drop of rain.

“I will lose about 20% of what I planted. That is the case with a lot of my neighbors. My worst fear is not being able to deliver to trading what we've sold anticipated for tradings,” reveals Cancian.

A grower and adviser in Nova Mutum, North of Mato Grosso, Naildo Lopes, told Agriculture.com that the most serious problems in his regions were the delay of planting and the lack of seed quality. He described the problem in his region: “Most of us planted in October with some delays. In some cases, there were 15 days without rain. Most people are replanting and recovering. Still, the yields will be 35% lower,” foresees Lopes.

The farmer and adviser affirms that costs and prices are the most threatening thing to soybean growers in Nova Mutum. “Those who did not sell yet have a big problem. I think they will be not be able to sell by over US$ 18/bushel. With the costs that we have, this means financial loss if the yields are low,” says Lopes.

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