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December 31, 2018

Dryness Concerns Developing in Northeastern and Southern Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

While the weather in most of Brazil continues to be beneficial for the soybean crop, there are two areas of Brazil that need rain, northeastern Brazil and the southernmost state of Rio Grande do Sul. The summer rainy season in northeastern Brazil has never really got on track. The rains they have received have generally been light and scattered and not enough to recharge the soil moisture. In fact, some analysts are expecting that 10% of the soybeans in the region may not be planted because it is getting too late and that farmers may plant grain sorghum instead.

The other area that needs rain is the state of Rio Grande do Sul in far southern Brazil. In Rio Grande do Sul the soybeans are 97% planted with 91% of the soybeans in vegetative development and 9% flowering. Some regions of the state have not received a significant rain for more than 30 days and the temperatures have been hotter than normal. The result has been spotty plant populations and potentially lower yields.

The forecast is not very encouraging for either northeastern Brazil or far southern Brazil with improved rain chances starting only next week.

Mato Grosso - The early soybean harvest has started in selected areas of the state. The soybeans being harvested are 95-day maturity soybeans that were planted as soon as the soybean free period ended on September 16th. Only a few fields have been harvested thus far, but more will be ready for harvest by mid-January.

In their last report for 2019, the Mato Grosso Institute of Agricultural Economics (Imea) indicated the soybean planting in the state was completed on December 13th and that farmers in the state increased their soybean acreage 1.1% to 9.78 million hectares (24.1 million acres). Imea estimates that the average yield in the state will be 56.2 sacks per hectare or 49.9 bu/ac. Farmers in the state have taken advantage of the soybean price to forward contract more than 50% of their anticipated production, which is 9.8% more than last year and 7.7% more than the 5-year average.

Parana - The Department of Rural Economics for the State of Parana (Deral) indicated earlier last week that the soybean crop in the state was 46% in vegetative development, 38% flowering, and 16% filling pods. The soybeans in the state were rated 2% poor, 11% average, and 87% good.

The Brazilian Association of Vegetable Oil Industries (Abiove), estimated that soybean meal production in 2020 will increase 1.1 million tons compared to last year to 33.5 million tons. Abiove estimated that soybean oil production will increase from 8.6 million tons last year to 8.8 million tons in 2020, but soybean oil exports will decline from one million tons last year to 300,000 tons in 2020.

The decline in soybean oil exports will be due to the increased percentage of vegetable oil blended into biodiesel. Starting in March of 2020, the blend percentage will be 12% vegetable oil (B12) with the vast majority of the vegetable oil being soybean oil.