Brazilian farmers will report strong corn and soybean harvests, despite setbacks to some southern crops from dryness, Conab said, as growers scramble to cash in on a double boost of strong production and prices.
Conab, the official Brazilian crop bureau, cut its forecast for corn production in the southern state of Rio Grande do Sul by 472,000 tonnes to 4.58m tonnes, a drop of 21% year on year, citing “climatic problems”, marked by dryness and high temperatures.
Indeed, for soybeans, Conab downgraded the Rio Grande do Sul harvest by 1.17m tonnes to 16.88m tonnes, a drop of 12.0% year on year, after “February presented below-expected rains, worsening the situation of crops, which have suffered from drought since the beginning of December”.
However, for most other states, corn output prospects were maintained, or improved, leaving Conab to lower its national production estimate for 2019-20 by just 402,600 tonnes to a level of 100.1m tonnes which would still, just, represent a record high.
In Mato Grosso, the top producing state, Conab restated expectations of an increase of 9.0% in sowings of safrinha corn, plantings of which were 92% completed by the end of last month, when the ideal seedings window closes.
The bureau cited corn’s “current profitability” for farmers and “favourable climatic conditions for cultivation”.
For soybeans, the production forecast was raised by 955,200 tonnes to a clear record of 124.2m tonnes, with the cut to hopes for Rio Grande do Sul more than offset by upgrades to expectations notable for Mato Grosso, Minas Gerais and Parana.
Farmer profitability prospects for both crops are being supported not just by strong output figures for most states, but by a boost to their crop prices from the weakening real.
A drop in Brazil’s currency lifts the value in local terms of assets, such as major agricultural commodities, traded in dollars.
Research institute Cepea pegged soybean prices at Brazil’s Paranagua port at R$92.55 per bag, up 5.3% so far in 2020 in local currency terms, and at a four-year high.
Cepea reported corn prices at R$55.55 per bag, up 14.3% for this year, and the highest on records going back to 2004 – a reflection too of tight Brazilian stocks, after a bumper 2019 export programme.
‘Guaranteed good business’
Farmers are accelerating forward sales of crops to cash in on the high prices, with Imea, the Mato Grosso research institute, reporting farmers having raised sales of 2019-20 crop, for which harvest is finishing, to 75.5%.
That is up 7.5 points month on month, and well ahead of the 61.3% coverage secured by this time last year.
Furthermore, Mato Grosso farmers have already sold 20.3% of their soybean 2020-21 crop, which is six months away from being sown. The figure a year before was 2.5%.
“With the improvement in oilseed [prices], the month of February showed good progress in the commercialisation of soy in Mato Grosso,” Imea said.
“Despite the fall in the Chicago [price], the current economic scenario continues to favour business,” with the real at record lows against the dollar.
“Coupled to this, the strong Chinese import demand in recent months has guaranteed good business.”
For corn, Mato Grosso growers have sold 73.4% of their 2019-20 crop, as in the main newly seeded, up from 52.9% a year before.
For 2020-21, forward sales have reached 15.2% - compared with zero a year before.
“Firm domestic demand and the rise in the dollar sustained the prices negotiated in the state,” Imea said.