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March 10, 2020

2019/20 Brazil Soybeans Over Half Harvested

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

The weather in Brazil continues to follow the same pattern - wet across central Brazil and too dry across southern Brazil. The forecast for this week is for the rain to move further north in Brazil and maybe some showers returning to southern Brazil late this week and into next week.

The 2019/20 Brazilian soybeans are 50-55% harvested compared to 55% last year. The soybean harvest in Mato Grosso is nearing completion with 91.4% harvested.

One of the big stories in Brazil is the impact on domestic prices from a 15% devaluation of the Brazilian real in just the last two months. After 12 straight days of getting weaker, the Brazilian currency strengthened slightly last Friday. At this writing, the Brazilian currency sank to another all-time low trading at more than 4.7 reals per dollar. A weaker currency is good for domestic prices since the grain is priced in dollars, but paid in the local currency. This has resulted in record high domestic grain prices in Brazil and aggressive farmer selling (see two later articles).

Brazilian farmers have sold 55% of their 2019/20 soybean crop compared to 43% last year at this time. For next year's crop, they have sold 13% compared to 5% last year at this time. In the state of Mato Grosso they have sold 70% of this year's crop and 30-32% of next year's crop.

Mato Grosso - The Mato Grosso Institute of Agricultural Economics (Imea) reported that farmers in the state had harvested 91.4% of their soybeans late last week compared to 94.8% last year and 79.7% average. This represents an advance of 7.3% for the week. The soybean harvest started out at an average pace, but it accelerated as the harvest progressed and it is ending ahead of average. Yields in the state continue to be positive with some variability.

Parana - The Department of Rural Economics (Deral) indicated that the soybeans in Parana were 54% harvested last week. In the municipality of Cascavel, which is located in western Parana, the soybean harvest is approximately 80% complete with yields averaging from 65 to 70 sacks per hectare (57.7 to 62.1 bu/ac), which is close to what had been expected. Soybean planting was delayed by dry weather last September and October, but the weather during the remainder of the growing season was OK.

Farmers in Cascavel have sold approximately 40% of their soybeans for prices in the range of R$ 75 to R$ 80 per sack (approximately $8.30 to $8.85 per bushel) and prices are even better now at R$ 83 per sack (approximately $9.10 per bushel). Farmers are also forward contracting their 2020/21 crop for even better prices of R$ 85 to R$ 90 per sack (approximately $9.30 to 9.85 per bushel).

Rio Grande do Sul - In their latest assessment of the summer crops in the state of Rio Grande do Sul, the Emater extension service confirmed that the irregular weather has resulted in reduced soybean yields. Last week, Emater lowered their estimate of the 2019/20 soybean production in the state by 16% from their earlier estimate to 16.5 million tons. This is approximately 3 million tons lower than what had been expected at the start of the growing season. The soybean crop in the state is only 2% harvested, so most of the crop is still in the critical pod filling stage. If dry weather persists in the state, Emater stated that their soybean estimate could move lower in subsequent reports. The soybean harvest in the state won't be completed until sometime in May.

The rains have been very irregular with some farmers receiving good rains and others not receiving any rain at all. In some of the hardest hit areas, soybean yields have been reduced 50% with a few farmers reporting yields as low as 7 to 8 sacks per hectare (6 to 7 bu/ac). In order for the soybean production estimate not to move lower, the driest areas of the state would need to receive at least one inch of rainfall per week until the crop is mature.

Rio Grande do Sul is traditionally the third largest soybean producing state in Brazil behind Mato Grosso and Parana, but it moved into second place last year when the crop in Parana was impacted by dry weather. According to the current estimate, the state will fall back in third place this growing season.

Bahia - The summer rains arrived late in western Bahia, but since their arrival, the growing season has been favorable for the soybean crop. Normally, farmers in western Bahia start planting soybeans at the end of October, but this growing season, they did not start until mid-November and some didn't plant until early January. The average soybean yield in western Bahia is generally in the range of 63 sacks per hectare (55.9 bu/ac), but this year, some farmers are now forecasting that yields in the best locations could be as high as 80 sacks per hectare (71.0 bu/ac).

Maranhao - The growing season started off dryer than normal in the state of Maranhao, but it is ending very wet. In the municipality of Balsas, which is located in southern Maranhao, some regions received rain every day last week more than 5 inches of rain in a 24-hour period. The wet weather has stalled the harvest of the early maturing soybeans, which had previously been negatively impacted by dry weather last November and December. It remains to be seen how much additional loses will result from the wet weather.