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January 25, 2012

Wet Weather Delaying Early Harvest Progress in Central Brazil

Wet weather continues to slow the early pace of soybean harvesting in Mato Grosso. According to the Mato Grosso Institute of Agricultural Economics (Imea), as of late last week, farmers in the state had only managed to harvest 2.7% of the state's soybean crop. The harvest pace should be at least double this amount given how early the crop was planted this growing season. Several months ago we had estimated that the farmers in Mato Grosso would harvest as much as one million tons of soybeans by the end of the first week of January, but that was before the rainfall started to pick up. Unfortunately, only about 600,000 tons of soybeans have been harvested by the end of the third week of January.

This slow start to harvesting is having a ripple effect on such things as: soybean seed quality, increased disease pressure, transportation systems, the start of soybean exports from Brazil, increased soybean exports from the U.S., and the planting of the safrinha corn and cotton crops.

Deteriorating seed quality - There are reports coming out of northern Mato Grosso that the soybean seed quality has started to deteriorate for some of the soybeans where the harvest has been delayed due to wet weather. After a soybean plant matures, each time the pods go through a wet and dry cycle it offers another opportunity for a fungus called Pod and Stem Blight to enter the pods and subsequently turn the seeds moldy. In addition to moldy seeds, the seeds are often small, shriveled, high in acidity and lighter in weight than normal. These poor quality seeds can quickly deteriorate even further once they are put in storage, so the grain elevator tries to move the soybeans as quickly as possible by blended them with better quality seed in order to meet quality standards. Grain elevators usually discount the price of the seed to the farmers when they deliver poor quality seed.

No one has yet stated that the yields of Mato Grosso soybeans are being negatively impacted by the poor quality seed, but if the wet weather would continue for several more weeks, the yields could start to decline. Persistent wetting and drying can cause the pods to split open letting the seeds fall on the ground and the worst case scenario would be if the seeds started to sprout in the pods. When that happens, yields are cut dramatically and the soybeans will probably not even be sellable. That has not happened yet in Mato Grosso, but it could be a possibility if the wet weather persists for several more weeks.

Defoliants applied to speed up maturation - The way the early soybeans mature in Mato Grosso is different than in the U.S. Farmers in Brazil often apply a defoliant to their soybean fields in order to speed up the maturation process. Once the defoliant is applied, the leaves quickly fall off the plant, the stems and pods dry down and the crop is ready to harvest within 5-7 days after application. If the timing is bad and wet weather sets in before the crop is harvested, the wet conditions can cause the seeds to deteriorate if harvest is delayed for a week or two. One thing you have to remember is that the weather this time of year in Mato Grosso is very hot and very humid. These greenhouse-like conditions can quickly result in poorer seed quality. Unfortunately, this is a common problem in Mato Grosso when farmers are trying to harvest soybeans in January, which is generally the peak of the rainy season. That is why the farmers try to plant several different maturity soybeans on their farm. They do not want to risk planting only early maturing soybeans due to the possibility of wet weather during harvest.

In the U.S. if wet weather delays the soybean harvest, the temperatures are usually quite cool which helps to slow the deterioration process. Additionally, it is very rare to have seeds sprout in the pods in the Midwest primarily because of the cooler temperatures.

Increased disease pressures from white mold, rust, and a lack of sunshine - In addition to poor quality seeds, farmers in central Brazil are also concerned about the wet weather causing increased disease pressure on their soybeans. Outbreaks of white mold have already been reported in central Brazil. This is a disease usually associated with wet weather and on a localized basis; the mold can result in lower yields.

Mato Grosso is also the state in Brazil with the most cases of soybean rust being reported (see later article). Nationally, 90 cases of the disease have been reported with 44 of those cases in Mato Grosso. Nationally, this continues to be the fewest number of cases of rust for this stage of the growing season since they started tracking the disease seven years ago, but for the state of Mato Grosso, it is the most cases of the disease in several years. Continued wet weather could make it more difficult for the farmers in the state to keep the disease under control.

Associated with the rainy weather in central Brazil is the general lack of sunshine. The nearly constant overcast skies have resulted in lower levels of solar radiation for at least the last month. It's hard to quantify the impact of lower solar radiation on soybean yields other than to say that generally when there is a lock of sunshine it is harder for the soybean crop to reach its maximum yield potential.

Slow start to Brazilian soybean exports - The slow start to the Brazilian soybean exports may end up being very important to the U.S. soybean market. The slow start is giving U.S. exporters a two or three week window of opportunity that was not anticipated just a month ago. Everything was on track for an early start to the 2011/12 Brazilian soybean harvest and subsequent exports - the crop was planted early, the crop developed well, and the first soybeans were ready to be harvested about at Christmas. Exporters were expecting an early start as well and vessels were scheduled to arrive at ports in southern Brazilian by the middle of January when the exports were expected to start flowing. That did not happen of course thanks to the wet weather.

There could be enough soybeans in position to start exporting within a week or two, but that will once again depend on the weather. The export season may still start earlier than last year, but it certainly will be much later than what we had originally anticipated.

Increased congestion at Brazilian ports - In anticipation of the start of the soybean harvest, thousands of truckers started heading to Mato Grosso in early January eager to begin hauling soybeans. This is one of the most lucrative times of the year for the truckers due to the tremendous demand for their services to move the crop to processors and ports in southern Brazil. Unfortunately, as of late last week, there were reports of thousands of trucks parked at truck stops throughout the state waiting for their first load of soybeans.

This delayed start to the harvest season is going to have a ripple effect all throughout the transportation system of Brazil. Once the weather breaks and the harvest resumes full speed, it is going to cause more congestion than what was already anticipated. The ports in Brazil are inadequately equipped to handle the flush of exports in a timely fashion, but unfortunately, they have now lost several weeks of potential export activity. This could mean that the export season will be more compact and it could also have a longer tail. How much longer the export season will last depends on the total soybean production in Brazil. The 2011/12 Brazilian crop is already estimated to be smaller than last year, so a smaller crop may help to ease the anticipated congestion.

Delays in planting Safrinha corn and cotton - When the soybean harvest is slow in Mato Grosso, it also slows the planting progress for the safrinha corn and cotton crops. Mato Grosso farmers are expected to plant a record safrinha corn crop this year, but very little of the corn has been planted at this point. The planting window for corn will remain open until about the third week of February, so there is still plenty of time, but safrinha corn yields are generally better if the crop is planted as early as possible.

The soybean harvest delays might actually impact the safrinha cotton acreage more so than corn. If a farmer is going to plant both cotton and corn after the soybean harvest, he will plant the cotton first because the planting window for cotton will close quicker, usually about the end of January. The cotton planting might be stretched out a little longer if strong cotton prices justify the potential lower yields, but generally the safrinha cotton needs to be planted by the end of January. If wet weather continues to delay the soybean harvest, it is possible that some of the intended cotton acreage could eventually be switched to additional safrinha corn acreage. That has not happened as yet, but it is a possibility.