So far, so good for Brazil

[LuanaGomes]

The U.S. Department of Agriculture’s Foreign Agricultural Service said yesterday in a report on its website that Brazil will harvest 2.454 billion bushels of soybeans in the year that starts Feb. 1, down 3% from the previous year. Seems to me that the USDA number is a bit too low. The results of a country-wide survey conducted by RPC (a Brazilian media company) Crop Expedition shows that the Brazilian soybean production has potential to at least equals last year’s result and reach 2.524 billion bushels in 2010/11.

The entire Brazilian grain belt got lots of rain over the past weekend. Although rainfall amounts were below average last month in the main grain producing states, the weather is great for the crops' development in Brazil. Fieldwork is pretty much done in Parana and Mato Grosso and the MaToPiBa area has about one third of the soybeans to go, but things are progressing smoothly. The weather people have now tuned down their forecasts, indicating that rain may not be an issue for Parana's crop this year. Now they say only Rio Grande do Sul should be the only satate that may face drought related problems this summer. Mato Grosso, on the other hand, can still face excessive rain during harvest, which could trim the state's soybean production. But, so far, so good.

[marketeye]

Luana,

I notice that your Brazil Crop Expedition group announced today, (12/07), its forecast for the national harvest of soybeans and corn in summer of 2011. You see the grain production reaching 69 million metric tons, which is smaller than earlier estimates. Do you see La Nina keeping this number lower? In the U.S., a famous saying is "Small crops get smaller".

What do you think?

Thanks,

Mike

[LuanaGomes]

Mike,

The 69 mmt (2.524 billion bushels) figure already takes into account the La Niña impacts on the soybean crop. That is considering the latest weather forecasts, which now indicate that drought may not be an issue on important states, such as Parana. Of course that any changes on the weather pattern could lead to a smaller crop. But, as I said before, so far, so good. If this were a El Niño year, considering the current acreage, the Brazilian bean production could easily surpass 70 mmt. According to the RPC Crop Expedition, yield should be slightly lower this year when compared to record productivity from last season, a El Niño year. So, despite the 1% drop forecasted for the Brazilian bean yields, production should be about 2% bigger, thanks to a 3% increase in planted area.

As far as corn goes, the scenario is a bit more complicated, as it is more susceptible to drought periods. So, in this case, even if with regular to slightly below normal rainfall, yields should drop about 2,68% from last year. Taking into account a drop of 3,46% in plated area, production will fall to 31.21 mmt (1.229 billion bushels), 6,14% below the previous season.

LG