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September 19, 2017

Early Spring Weather and Planting Progress in South America

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

Brazil - Now that the soybean-free period has ended in most of Brazil, farmers are free to start planting their 2017/18 soybean crop anytime they feel the conditions are suitable. In central Brazil including the state of Mato Grosso, the weather has been hot and dry with temperatures in the upper 90's and low 100's with virtually no rain over the past month. There are some light showers in the extended forecast toward the end of September and into early October.

Farmers in central Brazil generally like to wait until they receive 2-3 inches of rainfall before they start planting their soybeans in order to insure germination and emergence. I have not heard of any soybeans being planted in Mato Grosso unless the farmer has irrigation (which is limited in scope in the state).

In southern Brazil, the weather in Parana has recently been warm and dry with limited rainfall. Temperatures are in the lower 90's and the forecast is calling for increased chances of light showers during the last week of September. A few fields of soybeans have been planted in Parana and farmers are reporting problems with germination due to dry conditions. Farmers in Parana were allowed to start plating their soybeans on September 10th, which was five days earlier than last year, but dry conditions prevented farmers from taking advantage of the earlier planting. Generally farmers are waiting for increased soil moisture to start planting their soybeans or full-season corn unless they have irrigation.

Farmers in Parana, which is the second largest corn producing state in Brazil, are expected to greatly reduce their full-season corn acreage. The Department of Rural Economics (Deral) is estimating that the full-season corn acreage in Parana will decline 33% from 513,600 hectares last year to 344,500 hectares in 2017/18. The huge supply of corn in Brazil has resulted in very low domestic corn prices. Corn prices in Parana have declined from R$ 35 per sack in August of 2016 (approximately $5.13 per bushel), to R$ 18 per sack in August of 2017 (approximately $2.63 per bushel), a decline of 49%. The reduced full-season corn acreage will be shifted to the safrinha production.

In contrast, farmers in Parana are expected to increase their soybean acreage from 5.2 million hectares to 5.4 million hectares, but the total soybean production is expected to decline 2% due to soybean yields returning to more trend line levels in 2017/18 compared to the record high yields obtained in 2016/17. Soybeans will now account for 91% of the summer crop acreage in Parana.

Domestic soybean prices in Parana have also slumped due to excess supply, but soybean production is still more profitable than the alternatives of corn or dry beans. During August of 2016, soybean prices in Parana averaged R$ 68.17 per sack (approximately $10.00 per bushel) and during August of 2017 they averaged R$ 56.02 per sack (approximately $8.35 bushel).

Further south in the state of Rio Grande do Sul, they did receive some rain last week and the temperatures have been in the 80's. Early corn planting has started in Rio Grande do Sul and it is expected to continue this week.

Argentina - The situation in Argentina is very different than in Brazil. Central Argentina continues to be inundated by heavy rainfall especially in the provinces of Buenos Aires and La Pampa. The concern in Argentina is that some of these saturated areas may not dry out in time for the start of normal spring planting especially for corn. They are planting sunflowers in Argentina with 34% of the crop planted, but all the sunflowers planted thus far have been in northern Argentina.

Ironically, farmers in Argentina are just now finishing the harvesting of last year's corn crop. The Buenos Aires Grain Exchange is reporting that 98% of the 2016/17 corn crop has been harvested. All the corn left to harvest is in the saturated areas of central Argentina. The corn harvest in Argentina started back in March and it is now ending in September!

The 2017/18 crop acreage in Argentina is very uncertain due to the saturated and flooded conditions. The province of Buenos Aires has been the hardest hit, but the saturated conditions extend into areas of La Pampa, Cordoba, Santa Fe, and Entre Rios. In a worst case scenario, some of these hectares may not be planted at all this growing season. In a best case scenario, the rains will ease and the soils will dry enough to allow for a delayed planting of the corn and soybeans.