South American Update




Against all odds and sensationalist headlines

It’s been just a week since I wrote my last column. But it feels much longer. Although all days seem the same when we forcefully work from home, so many things have happened and so many battles have been fought – most of them on our social media timelines – that a week feels like a month.

Last week, the coronavirus pandemic, of course, remained as the number one trending topic here in Brazil, especially because our President, Jair Bolsonaro, has questioned the lockdown. For those who work in agriculture, like me, it was also an intense period of work and mismatch between reality and some news headlines.

Fake news x biased and lazy journalism
Although I have worked as a market analyst for most of my life, I am also a journalist. And, as such, I often find myself thinking about how the fake news phenomenon affects everybody’s lives. But there is one thing that I consider even worse than fake news.… Continue reading

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Exporting soybeans during a pandemic

By Daniele Siqueira, AgRural

My plan for this week was to write something not related to the coronavirus pandemic, since many of us already seem to be sick of so much information (and, unfortunately, misinformation disguised as clickbait headlines) about the disease and the measures that have been taken around the world to control its spread. But things have escalated fast here in Brazil over the last few days and it is impossible to keep going as if everything was normal. Right now, nothing is normal.

Although many Brazilian farmers have been selling soybeans at record prices, thanks to our weakening currency (a direct result of the risk aversion caused by the pandemic), some of them are not exactly in a bed of roses. In central and northeastern states, there are farmers who have debts in US dollars, due to the type of credit they use, and those debts have skyrocketed in just a few weeks.Continue reading

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As the world panics about coronavirus, Brazil sells soybeans

The coronavirus hysteria was, at least for a while, just a distant freak show that we were watching on TV and, for those who work with financial and commodity markets, on price charts too.

Since last week, however, COVID-19 is already part of our daily life here in Brazil. First with a few Brazilians who had been to Europe and tested positive after coming home; a couple of days later with people who have never been abroad getting ill; and now with almost everybody in line at supermarkets and drugstores, buying tons of toilet paper, food and, last but not least, alcohol to disinfect the hands and lift the spirits.

And let’s not forget that our President, Jair Bolsonaro, might be ill too, amid all the confusion around the results of his test. Positive? Negative? Who’s lying? Who’s telling the truth? Why was he wearing a mask? Has President Trump been infected too, since he met Bolsonaro in Florida just a few days ago?Continue reading

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In Brazil, it’s time to pay attention to “safrinha” corn

With half of the soybean harvest complete in Brazil by Mar 5, it is time, again, to take a look at the second corn crop, also known as “safrinha”, which is being planted later than normal due to a delay in the soybean crop, caused by irregular rains in the last quarter of 2019.

Until last week, 80% of the projected area had been planted in south-central Brazil, in line with the five-year average, but only because top producer Mato Grosso has nearly finished sowing, according to AgRural data. In other states, the ideal window is already closed or about to end and farmers are working at full steam to avoid planting a large area during the second half of March.

Riskier crop
The late planting makes the second corn crop more susceptible to yield losses caused by dryness and/or freezing temperatures during pollination and grain filling. Despite the delay, Brazil is likely to increase its area by around 3%, thanks to very attractive prices – a result of strong demand and a weakening Brazilian real against the dollar.Continue reading

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Brazil harvests a record crop amid export uncertainties

With 40% of its soybean area harvested by the end of February and favorable weather conditions in most of the country, Brazil is definitely headed for a record production this season.

In early February, AgRural raised its production estimate to 125.6 million metric tons, more than 10 million tons up from last year. There are drought-related losses, however, in Rio Grande do Sul, Brazil’s southernmost state and number-three soybean producer.

AgRural has already made two cuts to the forecasted production for the state since the beginning of the year and further reductions will be made in March. Other states, on the other hand, have very good prospects and are likely to make up for most of the losses in Rio Grande.

Exports
Even with a bumper crop, Brazil is likely to export less soybeans in 2020. Before the coronavirus outbreak in China, AgRural had estimated exports at 70 million metric tons, 4 million metric tons down from 2019, due to an expected increase in the US exports to China.Continue reading

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Dryness worsens in the South as Brazil’s soy harvest reaches 31%

It is Carnival in Brazil, but corn and soybean farmers don’t have time to rest or dance. They’d better hurry up, because time is ticking for the second corn crop planting, which is sown right after the soybean harvest – and this year the soy crop is delayed due to irregular rains in late 2019.

According to AgRural data, Brazilian farmers had harvested 31% of their 2019/20 soybean area by Feb 20, compared to 21% a week earlier, 45% in the same period a year ago and 30% on the five-year average. Top producer Mato Grosso leads, with 73%. Despite excessive rains in some areas of the state, quality issues are not a big concern so far and yield reports remain strong.

Catching up
As expected, the harvest pace finally picked up last week in states that planted later than normal, such as Goiás, Paraná, São Paulo and Mato Grosso do Sul.… Continue reading

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Women in Brazilian agriculture

Two weeks ago I put together some numbers from Brazil’s latest farm census, which was released in 2019, after two years of data collecting and processing. I basically compared the soybean farm sizes in southern and central Brazil, explaining why they are so different – logistics and prices received by farmers were among the reasons I listed.

Since that comparison made me spend in the blink of an eye the 600 words that I can write here, I promised I would visit the farm census numbers in a future column. So, here I am. And women in agriculture is always a good subject – not only to join the hype (and women do deserve to have their importance recognized and praised), but also to give an idea of how things can be different in a country like Brazil.

In 2017, Brazil had 5.073 million farmers and ranchers, of which 18.6% were women.Continue reading

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South America headed for another big soybean crop

After a very busy January, when some of us believed that a world war could follow Iranian general Soleimani’s death, when all of us saw the US and China finally signing the “phase one” trade deal, and when the entire world started fearing the coronavirus outbreak, here we are already in mid-February.
 
For us here in Brazil, it is time now to wonder how many acres the US farmers will plant with soybeans in their 2020/21 crop, after the significant cut to the planted area seen last year, and to take a closer look to the South American 2019/20 crop, which is being harvested.
 
For Brazil, the 2019/20 soybean crop started with many problems. The spring rains, which are crucial for the beginning of the planting season, arrived later than normal and were very irregular in several states until November and, in some areas, until December. After that, however, weather conditions dramatically improved.
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How big are soybean farms in Brazil?

By Daniele Siqueira, Ag Rural
Last week I wrote about how different Brazilian corn and soybean producing states can be in terms of weather, soil and location, since we don’t have anything like a grain belt – our farms are spread across the country, and it is a big country.

Writing about that made me look up for more information on those differences. And then I remembered that the final results of a new farm census were released in 2019, after two years of data collecting and processing. For those who like numbers —and I do! — it feels like heaven. And if one wants to show Brazilian peculiarities to an American audience, which is my case, it feels even better.  

The first thing that caught my attention was the number of farms. In 2017, Brazil had 236,245 soybean farms. And what is interesting in that? The number of farms by state.Continue reading

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Brazil, a big corn and soybean belt

The ease of traveling within the United States has always impressed me since the first time I set foot in the Midwest, 13 years ago. Not only because of the mind-blowing transportation infrastructure (which looks even more amazing to my Brazilian eyes, very used to the logistical problems and challenges we have here), but also because doing a crop tour, for example, is painless, since most of the corn and soybean production is concentrated in the Midwest.

That’s why I can’t help a somewhat condescending smile when some American or other foreigner suggests a crop tour in Brazil’s corn and soybean belt. Of course we have crop tours – and very good ones. But driving, for example, from Mato Grosso to Paraná, Brazil’s top producing states, is very challenging, to say the least. Not only because we have bad and dangerous roads (despite all the improvements we’ve seen in the last few years), but also because they are very different states, with more than one thousand miles between them.

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Brazil headed for a bumper soy crop amid US-China deal

The 2019/20 soybean crop harvest has started with expectations for a record production in Brazil. Despite planting delays in some states due to irregular rains in the fourth quarter of 2019, production is pegged by consultancy AgRural at 123.9 million metric tons, 1.2 million up from the previous estimate and a new record for the country, above the 119 million metric tons produced two years ago.

By Jan 16, 1.8% of the soybean area had been harvest in Brazil, most of it in top producer Mato Grosso, where yield reports have been coming at the high end of expectations. In the rest of the country, soybeans still need beneficial weather conditions until at least the end of February to secure a bumper crop, since important states such as Paraná, Mato Grosso do Sul and Goiás had significant planting delays. All of them, however, have favorable weather forecasts.

Still at risk
In Rio Grande do Sul, Brazil’s southernmost state, and in the North/Northeast region known as “Matopiba” (Maranhão, Tocantins, Piauí and Bahia), hot, dry conditions seen in December reduced the yield potential.… Continue reading

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How recent corn losses will impact Brazilian exports in 2020?

The new year has started with crop woes in Brazil. No, I am not talking about soybeans, my favorite subject here and everywhere. I am talking about corn – the first corn crop, which has been damaged by hot, dry conditions in some southern producing areas.
And now you might be questioning whether a crop failure in Brazil could result in weaker exports here and, consequently, in more sales of US corn in 2020. That is a fair question. But the answer is no. The problems that Brazil’s first corn crop faces right now will not impact Brazilian exports.
As I have already explained a few weeks ago right here in this column, Brazil grows three corn crops a year. The first crop is harvested from January to May and represents about 25% of Brazilian total corn production. It is grown in states where weather conditions do not allow a second corn crop – which is planted from January to March, right after the soybean harvest.
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A bitter Christmas and an unhappy New Year for Argentina

By Daniele Siqueira

Although this column is called “South American Crop Update”, as a Brazilian I usually write about… Brazil. This time, however, I ask my Argentine colleagues for permission to say how sorry I feel for their country and especially for their farmers. No, I am not being ironic. Although the measures recently announced by their new government are likely to benefit Brazilian agricultural exports (and the US exports as well!), that is definitely not the way farmers should be treated by any government – especially farmers who do so much for their country’s economy as a whole.

Leftist Alberto Fernández, the new President of Argentina, took office just a few days ago, but is already making history in Argentina’s long record of presidents who specializes in bad agricultural policies. Among other measures aimed to start fighting a serious economic crisis, his emergency bill sent to (and approved by) Congress last week raises export taxes on agricultural goods such as soybeans, soy meal, soy oil, corn and wheat.Continue reading

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Phase-one deal is on the table; what now, Brazil?

The preliminary agreement announced last week by the United States and China was the most important step towards softening tensions between the world’s two largest economies since the beginning of the trade war in 2018. But it is still surrounded by uncertainty. For the agricultural sector, the main question is how much soybeans, meat, wheat, corn, cotton, etc. is China going to purchase from the United States in 2020. For Brazil, that is a key question, since its agricultural exports have been immensely benefited by the trade war.

In 2018, Brazil exported 83.3 million metric tons of soybeans, 22 percent up from the previous year and a massive fresh-new record. China was the destination of 68.2 million metric tons, compared to 53.8 million in 2017 (28 percent up). Since Chinese importers made all efforts to buy as much as possible from Brazil (to make things worse for China, Argentina had had a crop failure that year), they inflated Brazilian export premiums.

Continue reading

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South America: Mr. Trump, we haven’t devaluated our currency on purpose

Last week, President Trump tweeted that he would restore tariffs on all steel and aluminum that Brazil and Argentina export to the United States. He would do that because, according to his tweet, the two South American countries “have been presiding over a massive devaluation of their currencies”, which is “not good” for American farmers.

He is right. The devaluation of the Brazilian real and the Argentine peso really is a bummer for American farmers. It makes producers in those countries happy with the price received for the products they ship, and that spurs farmer selling. At the same time, prices in U.S. dollars paid by importers don’t necessarily climb – sometimes they even fall, making South American exports more competitive when compared to products shipped by the United States.

A metric ton of Brazilian soybeans priced at $350 FOB Santos, for example, equals to BRL1,050 when the Brazilian real is at BRL3 to the dollar.Continue reading

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Will Brazil plant corn later than normal in 2020?

The soybean planting in south-central Brazil is now relatively on pace with historical averages, but irregular rains in September, October and early November resulted in delays in several states. Those delays are not likely to cause yield losses to the soybean crop, but will result in a narrower planting window for the second corn crop (“safrinha”), which is planted right after the soybean harvest. A later-than-normal harvest will lead to a delayed start to the corn planting and, probably, to an extension of the planting season into March.

How bad is planting in March?
Planting corn in March is not unusual. On the contrary, since the ideal planting window ends in mid-March in several Brazilian regions. But planting in March normally results in more risk, because corn will pollinate under potentially harmful weather conditions: lack of moisture, shorter days and even freezing temperatures in some areas. That’s why farmers are always planning on planting as soon as possible. 

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Logistics drive up costs for Brazilian producers

If you have read my previous article, when I wrote on Brazil’s corn production and the massive export record established this year, a question might have popped into your mind. How on earth is Brazil being able to export so much corn (and soybeans) if the country is well known for its terrible logistics? And, if you are really into the agricultural markets, memories of some famous photos of dozens of trucks waiting in line on some muddy road may have emerged.

Some Brazilian regions still have serious logistical problems, especially when compared to the United States. In 2018, the cost per metric ton to ship soybeans from Davenport, Iowa to Shanghai, China through the U.S. Gulf reached $88.80, according to USDA data. For Sorriso, Mato Grosso (Brazil’s top producer state), shipping soybeans to the same Chinese region, using the Brazilian port of Santos, cost $122.08 per metric ton.

That difference, of course, means that farmers who grow soybeans in Sorriso, located 1,190 miles from the port of Santos, in southeastern Brazil, received less for their production.Continue reading

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Understanding the Brazil corn crop

Even if the mere idea of visiting Brazil has never crossed your mind, you probably have listened to a song called “The Girl From Ipanema”, maybe in Frank Sinatra’s voice. And what does that song have to do with agricultural markets?

Nothing. But one of its composers, Brazilian Tom Jobim (who sings the song with Sinatra), once said that Brazil is not for beginners. That sentence became a famous and useful way to describe how difficult it is to understand Brazil’s peculiarities. And its corn market is one of them.

As you probably know, Brazil grows two corn crops a year. Well, since last October, it is officially three, but I will write about that third crop another time. For now, let’s stick to the two traditional crops. The first one is planted from September to December and competes for area with soybeans.

Considering that Brazil is now a soybean powerhouse, it is not a surprise that the first corn crop has lost millions of acres over the last two decades.Continue reading

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More regular rains take Brazil’s soybean planting to 58%

Brazilian farmers had planted 58 percent of their 2019/20 soybean area by Nov 7, according to a weekly survey conducted by AgRural. That represents a progress of 12 percentage points in one week and keeps the new crop planting pace slightly ahead of the five-year average. There is still a delay, however, in comparison to last year.

Favorable weather conditions seen last week took the area already planted to 94 percent in top-producer Mato Grosso, where the soybean crop develops well so far. The only issue, for now, is that the state will not have new soybeans entering the market as early as in the 2018/19 season, when some farmers were already harvesting in late December.

Mato Grosso grows about 65% of Brazil’s second corn crop, which will be planted right after the soybean harvest, in January and February 2020. That means that a good chunk of the Brazilian corn crop will not be behind schedule or have any significant problem caused by delays in the soybean planting.

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South American crop update

By Daniele Siqueira, AgRural

Another crop season is underway in Brazil and things have not started exactly well for soybeans. And a poor start to the soybean crop always fuels speculations about the second corn crop, which is planted in the beginning of the year, right after the soybean harvest, and accounts for about 70% of Brazil’s total corn production and almost the entire corn export program. That’s why many people are already asking about the second corn crop planting window. Is Brazil going to cut its corn acreage in 2020 due to the soybean delay?

By Oct 17, Brazilian farmers had planted 21% of their intended area, compared to 34% in the same period a year earlier and also 21% on the five-year average, according to consultancy AgRural.

In top producer Mato Grosso, the soybean planting caught up after a slow start in September, and about half of its area was already planted by Oct 17.… Continue reading

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