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November 29, 2016

2016/17 Brazil Soybean Planting Three Quarters Complete

Brazilian Soybeans - The weather last week was once again split between central and southern Brazil. Central and eastern Brazil continues to receive abundant rainfall and there is more rain in the forecast. In contrast, it was generally a dry week in southern Brazil until this past weekend when there were scattered showers across southern Brazil.

The forecast is calling for additional chances of rain across southern Brazil early this week, which would be a welcomed relief from the recent dry pattern. After a cool start to the growing season, the temperatures in southern Brazil are expected to return to more summer-like levels this week. I would estimate that 30-35% of Brazil's soybeans have experienced below normal rainfall during the month of November and many farmers feel that the cool and dry conditions may have impacted the early maturing soybeans the most.

The Brazilian soybean planting is approximately 75% complete which is about average for this time of the year. Many of the big producing states have nearly completed the 2016/17 soybean planting. In Mato Grosso the soybeans are 97.6% planted and the crop is rated generally good to excellent. In Parana the plating is 95% complete with 98% of the crop rated in good condition. The soybeans in Rio Grande do Sul are 60% planted. The germination has generally been good in Rio Grande do Sul with the exception of the northwestern region where dry weather negatively impact the germination. In Mato Grosso do Sul, the soybeans are 100% planted, but there is concern that recent dry weather may have impacted the yield potential of the crop.

Going forward, southern Brazil is the area to watch. In some areas of Mato Grosso do Sul for example, prior to this past weekend, it has not rained for 25-30 days and farmers are concerned that some of their soybean yield potential has already been lost. The earlier planted soybeans probably will be impacted the most because they already started flowering when the weather turned dryer. Going forward, the forecast is calling for increased chances of rainfall in southern Brazil, but it remains to be seen if the showers will be heavy enough to completely recharge the soil moisture.

Another characteristic of the early summer weather in southern Brazil has been the cooler than normal temperatures. There were even light frosts in the higher elevations of Santa Catarina and Rio Grande do Sul as late as two weeks ago. The pattern now seems to be changing to more typical summer temperatures. The forecast is calling for temperatures in the range of 30°C to 35°C (86°F to 95°F), which is much more typical for this time of the year.

Mato Grosso do Sul is the state closest to being 100% planted and farmers in the state are worried that their profit margins might slip away, especially in the dryer areas of the state. They estimate that the cost of producing soybeans is in the range of 38 to 42 sacks per hectare (33 to 36 bu/ac). In a good year, their soybeans would yield in the range of 48 to 52 sacks per hectare (42 to 45 bu/ac). If their soybean yields would decline by 20% due to dry weather, they would need to sell their soybeans for at least R$ 75.00 per sack to turn a profit. Currently, soybeans in the region are selling for R$ 68.00 per sack. Therefore, in order to make a profit, either their yields need to be good or the price of soybeans needs to increase.

Brazilian Full-Season Corn - The full-season corn in Parana is 99% planted and the crop is rated 95% in good condition and 5% average. The corn in Parana is 89% in vegetative development and 11% pollinating or beyond. The full-season corn in Rio Grande do Sul is 90% planted with 70% in vegetative development, 20% pollinating, and 10% in grain fill.

In the dryer pockets of southern Brazil, some farmers are concerned that the recent dry weather may have negatively impacted their corn just as it was entering pollination. There has been some very welcomed rains over the last few days in southern Brazil so it is probably too early to judge the eventual impact from the dryer than normal weather during most of November.

The eventual Brazilian corn production will depend on what happens with the safrinha corn crop which is two thirds of Brazil's total corn production.