November 30, 2011
Trip Report - Most Brazilian Crops off to Good Start
We have been traveling in Brazil for a week and after starting in Sao Paulo, we traveled north through the state of Sao Paulo (sugarcane), then north through the state of Minas Gerais (corn, coffee, soybeans), then further north into western Bahia (soybeans, corn, cotton), then west to Brasilia and further west through the state of Goias (soybeans, corn), continuing west into southeastern Mato Grosso (soybeans, corn, cotton) and we are now in Rondonopolis, Mato Grosso.
- During the seven days we have been in Brazil, it has rained every day and on three or four of those days, it rained all day. For the most part it has been cloudy and rainy. We did not see any bright sunshine until day six or seven.
- In most of the areas we have traveled, it has been quite wet and if the crops are not planted, it is because it is too wet.
- The only area that we saw that it was dry was in central Goias and the crops there needed a rain. The soybeans in Goias are still small (6-10 inches tall), and they were showing some moisture stress. On our travels thus far, the dry areas represented about 10-15% of the total area.
- As we traveled through central and northeastern Brazil, I did not see any major concern of dry weather due to La Nina. The growing season has just started and it may still develop of course, but for now, the weather seems to be cooperating and the crops are developing normally.
- It is very obvious that farmers in Brazil have planted more full-season corn than normal. The state of Minas Gerais is going to have the most full-season corn acreage in 2011/12 and in parts of the state, there is more corn than soybeans.
- Most of the full-season corn has been planted and if it has not been planted, it is because it is too wet.
- The most advanced corn we saw was in western Bahia where some irrigated corn is starting to pollinate, but most of the corn that we saw across Brazil was between one to two feet tall.
- The general condition of the corn is excellent, the plant populations are good, the color is good, and for the most part, the soil moisture is good as well.
- Everything seems to be on track for a very good full-season corn yields and production.
- The safrinha acreage will also be higher this year because of the high corn prices and the early start to planting the soybeans.
- The greatest increase in full-season corn acreage seems to be in the state of Minas Gerais and in western Bahia.
- Most of the soybeans have already been planted and any delays in planting the remainder of the soybeans is being caused by wet conditions.
- The most advanced soybeans are approaching knee high with the majority of the beans about a foot tall.
- With the exception of central Goias, where it is dry, most of the crop has good soil moisture.
- The majority of the soybeans that we saw looked very good with good plant populations and good plant health.
- If the weather continues to cooperate, Brazil should have a very good soybean crop.
- The sugarcane harvest has basically ended earlier than normal this year and the crop in general was very disappointing.
- Some of the recently planted sugarcane looks ragged and it is apparent that it suffered from the freezing temperatures back in June.
- The northern part of Sao Paulo state is basically 100% sugarcane production with sugarcane as far as you can see in all directions.
- There is a lot of replanting of the sugarcane occurring, but industry representatives are already lowering expectations for the next several years due to the relatively poor quality of the sugarcane and uncertainty about how outside investors will be able to invest in the sugarcane sector.
- The shortage of ethanol is already being reflected in the price with some stations charging as much as US$ 4.90 for a gallon of ethanol. Gasoline prices are even worse with some stations charging as much as US$ 6.90 a gallon. With these two prices ethanol is 71% of the price of gasoline which means it is more economical to use gasoline. Any time the price of ethanol is more than 70% the price of gasoline, gasoline is the better buy.
- Ethanol prices during the intra-harvest period (December to March) will probably hit new record levels.
- The sugarcane sector is the one disappointment in an otherwise booming agricultural economy
John Deere Appears to be Booming in Brazil
John Deere seems to have really come on strong in Brazil. I don't know what their market share is, but I am certain that it is increasing. In the main production areas, there is a John Deere dealership in every major town. In the far western region of Bahia state in the town of Luis Edwardo Magalhaes, the John Deere dealership had 35 combines setting on the front lot, which is the most I have ever seen in Brazil. In addition to tractors and combines, they are also selling sugarcane harvesters as well. Of course, in addition to John Deere, every other American company has a presence here including: equipment, grain, chemical, and seeds.