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January 15, 2019

Brazil Soybean Harvest Underway, Early Yields Disappoint

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

The weather last week in Brazil was hotter and dryer than normal across central and northeastern Brazil, while they received very heavy rains in southern Rio Grande do Sul. The forecast for central and northeastern Brazil looks like more of the same, at least for the near term forecast with improved chances of rainfall forecasted for later this week. There have been rains recently in southern Brazil (too much rain in southern Rio Grande do Sul), and there is more rain in the forecast for the region.

Virtually every major soybean producing state in Brazil is now forecasting lower soybean yields compared to last year. The yield reductions, especially for the early maturing soybeans, range from down 4-5% to 30% or more depending on location. The early planted or early maturing soybeans were hit the hardest because they were filling pods during December when it was the driest. It is now the medium maturing soybeans that could be impacted by the dryer than normal conditions.

Conab lowered their estimate for the 2018/19 Brazilian soybean crop 1.2 million tons to 118.8 million. They did not lower it as much as many private analysts had expected, which was not a surprise because they tend to be behind the curve especially when the yield estimates are changing rapidly. In their report, they commented on the various problems facing the Brazilian soybean crop, so I think they will lower their estimate again in their February report.

The soybean harvest in Brazil is underway with AgRural reporting that 2.1% of the soybeans have been harvested compared to 0.1% last year and 0.4% for the 5-year average. The soybean harvest in Parana is 6%, Mato Grosso is 3.9%, and Goias is 1.6%. The harvest is starting earlier than normal because of early planting and the fact that the hot and dry conditions accelerated the maturation process for some of the early planted soybeans.

Mato Grosso - The Mato Grosso Institute of Agricultural Economics (Imea) indicated a little faster soybean harvest pace than AgRural. Imea estimated the harvest pace at 5.6% compared to 1.2% last year. The most advanced harvest is in the western part of the state where 9% of the soybeans have been harvested. Farmers in western Mato Grosso generally plant their soybeans earlier than in other regions of the state and they harvest early as well. This is also a big cotton producing region, so they want to harvest the soybeans as early as possible to allow more time for safrinha cotton.

In the municipality of Campos de Julio, which is located in western Mato Grosso, some yields are in the range of 60 sacks per hectare (53 bu/ac), which is typical for the region. The weather in this part of the state has been generally good. Farmers are not happy with local soybean prices though, which are now in the range of R$ 60.00 per sack or approximately $7.25 per bushel.

Parana - The hardest hit area of the state was in western Parana were many areas went 40 days without rain accompanied by high temperatures. There are reports of soybean yields in the mid-20 bu/ac range when normally it should be in the low 50's. In the municipality of Toledo in western Parana, the most commonly reported yield thus far is in the range of 20 sacks per hectare (18 bu/ac). The yields in this area would normally be in the mid 50 bu/ac range. These yields are from the early maturing soybeans which were hit the hardest by the hot and dry weather during December.

The worst I have heard thus far is a yield of 10 sacks per hectare (9 bu/ac) in an area where they were expecting 65 sacks per hectare (57.7 bu/ac). Any rain going forward will be too late for the early planted soybeans, but they could help soybeans that were planted in October.

The Department of Rural Economics (Deral) rated the soybeans in the state last week at 12% poor, 30% average, and 58% good. The western and southwestern regions of the state were most impacted. These two regions produce about 30% of the state's soybeans and some early yields are down as much as 40% from initial expectations.

Mato Grosso do Sul - In the municipality of Chapadao do Sul, which is located in northeastern Mato Grosso do Sul, the first soybean yields have come in less than 50 sacks per hectare (44 bu/ac). The yields last year in this area were approximately 60 sacks per hectare (53 bu/ac). Farmers in the area have been very cautious with their forward selling of their soybeans for numerous reasons including: local soybean prices have declined, they are uncertain about their production, the higher freight rate issue is unresolved, and the Brazilian currency is getting stronger.

Rio Grande do Sul - The soybeans in Rio Grande do Sul are some of the latest planted in Brazil. The local extension service estimates that 32% of the crop is flowering and setting pods. The news out of Rio Grande do Sul is that they have received too much rainfall especially across the far southern part of the state. Even in the northern parts of the state, some farmers have had to replant their soybeans two or more times due to the saturated conditions.

In southern Rio Grande do Sul, some areas have already received 350 mm of precipitation (14 inches) thus far in January and the month is only half over. In the southern part of the state, approximately 30% of the soybeans are planted in low lying areas that are prone to standing water. Most of the soybeans in Rio Grande do Sul are produced in the northern half of the state.

The Soybean and Corn Producers Association of Rio Grande do Sul (Aprosoja /RS) estimates that the production in the state will be down 6% from last year. The Association of Cereal Companies in Rio Grande do Sul (Acergs) estimates that the production will be down 10% from last year.

Northeastern Brazil - Up until now the conditions in western Bahia and the rest of northeastern Brazil have generally been good. They started the growing season with good soil moisture, but the recent weather has not been as friendly. They had a short dry period during December and the recent weather has turned dryer as well. The forecast for the region is calling for below normal rainfall for the remainder of January, so this is an area to watch. Northeastern Brazil produces about 11-12% of Brazil's soybeans.