By Guil Signorini, Department of Horticulture and Crop Science, The Ohio State University
The changing climate impacts agricultural production and creates logistical challenges globally. Recently, the USDA Agricultural Marketing Service highlighted record low water levels in the Mississippi River System, causing unprecedentedly high grain barge rates in all seven originating locations along its rivers. Southbound barge rates in the Cincinnati and Lower Ohio stretches were 75% and 60% above the 10-year average for October (2012-2021). The Mississippi water level was also critical in October 2022, leading to operational halts and reduced barge loads. What was supposed to cost $27.60 per ton of grain transported via barges to Louisiana ports in normal conditions exceeded $93.40 per ton in October 2022 and $45.16 in October 2023. Over 60% of all U.S. soybean exports occur between October and January every year, and over 90% of the soybeans we export leave the country through Louisiana ports. These facts make the Mississippi River System vital for the U.S. soybean complex, highlighting the need to manage climate change for long-term sustainability and international competitiveness.
However, climate changes do not affect the U.S. alone. The 2023/24 grain season in Brazil had a rough start. While El Niño conditions mark the current season (that is, excessive rainfall in Southern Brazil and drier conditions in Center-West states), unusually high temperatures in November affected the development of crops planted early in the season. Temperatures were above 104 degrees F in rural areas of Mato Grosso in mid-November, causing wildfires (highly unusual for this time of the year). Typically, Central Brazil sees early planting in October to facilitate double-cropping, with corn often chosen as the second crop after soybeans.
Early planters in Mato Grosso experienced drought and temperature stress, with soybean plants showing signs of shortened vegetative growth and flowering much earlier than expected. Forecast agencies estimate that 4.2% of the sown soybean fields in the Center-West region will need replanting, covering an area of 1.26 million acres. Consequently, some growers have reconsidered their season plans and shifted from replanting soybeans to sowing cotton. Double-cropping would still be possible with corn, although the production cycle would be pushed back approximately a month, leading to additional challenges toward the end of the reproductive stage. The growers who opted for cotton, an expensive and technical crop to grow in Central Brazil, are relying heavily on weather forecasts for the next weeks. Rainfall is estimated to accumulate between 1.3 and 1.8 inches in most of the Center-West region — half of the precipitation one would expect in neutral years (that is, absent of the El Niño or La Niña phenomena).
For most (risk-averse) growers, high temperatures and drought in the Center-West and wet conditions in the South led to delayed planting. The official national data for Nov. 25 indicates that 75.2% of the soybean crop has been sowed, compared to 86% at the same time last year. This is also the slowest planting pace since 2015/16. As a consequence of damaged plots due to high temperatures and droughts, reallocation of farmland to cotton, and delayed planting, research agencies and consulting firms have adjusted their soybean production forecasts, anticipating a reduction of approximately 1.3%. Despite this, Brazil’s soybean production is still projected to surpass 160 million metric tons, reflecting a 3% growth compared to the 2022/23 season.
The delayed planting of the first crop also contributes to a reduction in the anticipated corn production in 2023/24, as harvest schedules are pushed back by approximately a month. This delay, combined with downward trends in Chicago corn futures for May and July 2024 and high fertilizer prices until October, led to a 9.5% drop in the corn production forecast compared to the production in the previous season. Favorable weather conditions for the double-crop corn in the Center-West region, attractive commodity prices, and new trading opportunities with China made Brazil the top corn exporter last season — a story that is unlikely to repeat in 2024. Nevertheless, total corn production is still projected to overcome the 2021/22 output of 113 million metric tons. Official reports in January will undoubtedly review their original guess.
In the grain logistics front, climate change and weather uncertainties pressure Brazil in a similar fashion it affects the U.S. While the Amazon River Basin has gained prominence and moves about 24% of the country’s soybean exports, droughts related to El Niño reduced water levels in the Madeira River and forced barges to navigate with one-third of their load capacity in early November. With over 30 developing logistic enterprises along the rivers of the Amazon Basin and six major ports connecting to Rotterdam and Shanghai, the need to balance economic development and climate has never been more evident. The latter argument fits Brazil as much as it does the U.S., inviting us all to consider proactive measures. Unusual weather patterns and water levels in key waterways call for attention. Is this all in the hands of policymakers and politicians, or are there changes we can make to balance things out?