South American Update Archive

By Daniele Siqueira, AgRural Commodities Agrícolas

March has arrived and that means that another Brazilian soybean crop is wrapping up and the new U.S. crop is just around the corner. It has been quite a season, with hot, dry conditions decimating a significant part of the production in southern Brazil.

With about 50% of the 2021/22 harvest complete by the end of February, production is estimated at around 125 million metric tons, 20 million down from the initial estimates thanks to a harsh drought sponsored by La Niña, the devilish girl.

Selling at record prices (but just a little)
The crop failure in southern Brazil, along with a disaster in Paraguay (production is more than 50% smaller than it would be in a normal year) and some losses in Argentina, where the soybean fields still need rain in March to avoid major yield losses, has helped support higher prices in Chicago since the beginning of the year.… Continue reading

By Guil Signorini, Department of Horticulture and Crop Science, The Ohio State University

A fascinating trait of modern human society is its resilience and ability to adapt to challenges. Two recent South American updates touched on this topic when talking about the latest occurrences in the Brazilian agricultural sector. The first update mentioned innovative financial tools to ease the steep operational costs of growing grain crops in Brazil. A second update defined the 1995 energy sector reform as an essential policy change to incentivize renewable electricity generation. 

In this vein, grain crops grown in Brazil offer additional insights. Natural challenges caused by the tropical weather and poor soils were the engine and fuel behind remarkable maneuvers to address production limitations. Back in the 70s, when the expansion of agriculture reached the Cerrado region of Brazil, the soils could be described as follows: sandy or light-textured, naturally poor in nutrients, highly acid (pH between 3.8 and 5.2), little organic matter (between 3% and 5%), high Aluminum saturation (greater than 45%), and little water holding capacity (less than 3 inches in soils with 23-inch effective depth).… Continue reading

By Daniele Siqueira, AgRural Commodities Agrícolas 

Imagine having your soybean crop trying to bloom and fill pods under 100 to 110 degrees every day for two weeks, after receiving below-normal rains for nearly three months and already having lost most of your corn crop, which is planted earlier than soybeans. That has been the reality in Rio Grande do Sul, Brazil’s southernmost state and number-three soybean producer. 

In the first days of January, AgRural cut its production estimate for the 2021-22 Brazilian soybean crop to 133.4 million metric tons, 12 million down from the potential production forecasted in early November and about 4 million metric tons smaller than the record crop harvested in 2020-21. Even before the failure in Rio Grande do Sul, Paraná (our number-two soybean producing state) also lost a significant part of its crop due to hot dry conditions in November and December, and further damage occurred in January. … Continue reading

By Guil Signorini, Department of Horticulture and Crop Science, The Ohio State University

Brazil offers one of the most exciting cases of success when it comes to clean energy. Due to a favorable landscape, an abundance of rivers, and natural dams, approximately 65% of the electricity consumed in the country comes from large-scale hydropower plants. But it was through innovative policy reform in 1995 that renewable energy producers were authorized to trade electricity directly with final consumers. Fast forward, estimations suggest that 9.5% of the electricity consumed today comes from biomass, the second most important source in Brazil’s electricity matrix. Biomass-based electric generated by agricultural products is used for lighting approximately one-tenth of the country’s houses, farms, and businesses.

The Brazilian fuel sector is just as clean. Nearly all fuel stations sell ethanol, gasoline, and diesel. Most passenger cars and motorcycles are equipped with flex-fuel engines that can take gasoline, ethanol, or any blend between the two fuels.… Continue reading

By Daniele Siqueira, AgRural Commodities Agrícolas 

I am writing between Christmas and New Year’s Day — that holiday week when we are not exactly sure about which day is which. Here in Brazil, many people take a break during this period of the year, and that is also my case. And, being in the Southern hemisphere, this is, of course, our summer break. 

This spring/summer has been particularly hot and dry in southern Brazil, a region made up of three states (Rio Grande do Sul, Santa Catarina and Paraná) that account for about 30% of the country’s soybean production. After good rains in October, the region started to experience a spell of dryness and above-than-normal temperatures that have weighed on the 2021/22 soybean crop prospects since then.

Things started to become serious in November

The first regions to feel the pain imposed by the effects of another La Niña (a phenomenon that sometimes reinforces drier periods that normally hit the southern states during this time of the year) were western and southwestern Paraná, where soybeans are planted between mid-September and mid-October.… Continue reading

By Guil Signorini, Department of Horticulture and Crop Science, The Ohio State University

Last month this column featured an article about souring fertilizer and chemical costs faced by Brazilian farmers as the 2020/2021 season unfolds. The latest developments show that the Southern farmers have not changed planting and growing plans due to these challenges. On the contrary, projections from CONAB (Federal Agency of Agricultural Supply) indicate that grain growers intensified production. Soybean production is expected to reach 4.9 billion bushels, a 7% increase over the last season, and the highest production mark ever registered. Projections for the corn crop are just as significant. Estimations indicate that the country will produce 4.6 billion bushels, a vital recovery from last season’s drop in production due to drought.

Nevertheless, what catches our curiosity is how Brazilian farmers have managed to improve production projections considering the pandemic and the severe pressure from high ag input costs.… Continue reading

By Daniele Siqueira, AgRural Commodities Agrícolas 

Christmas lights are everywhere once again and that is a reminder for Brazilian farmers: it is December already and time to make or break the soybean crop. I am writing this article early in the month, while the crop in central states (such as top producer Mato Grosso) develops in very good shape, already heading into the pod-filling stage with abundant rain and excellent yield prospects.  

Things have been good too in the Southeast and in the North/Northeast of the country, where most of the soybeans are still in vegetative stages. In the South, on the other hand, a drier and warmer pattern has slowed the soybean planting in Rio Grande do Sul, our third largest producer, and made farmers concerned about areas in reproductive stages in parts of Paraná, Brazil’s second-largest producer, especially because forecasts for the first half of December show little rain and high temperatures. … Continue reading

By Guil Signorini, assistant professor, Department of Horticulture and Crop Science, The Ohio State University

It is that time of the year again when our fellow farmers from Brazil dedicate time and energy to plant their crops. And as they do, challenges and opportunities in their operations signal factors and trends that may drive our decisions next Spring when the weather permits us to plant our crops again.

Brazilian farmers are fast-paced sowing soybeans due to favorable weather and soil conditions. On Nov. 1, IMEA (Mato Grosso Ag Economics Institute) informed that 83% of the soybean crop has been sowed in the state. The state of Mato Grosso alone grows more soybeans than Ohio, Michigan, Indiana, and Illinois combined. It also grows approximately 60% of the corn area in these four Midwestern states. Although other states of Brazil lag behind in sowing, research agencies estimate that 55% of the total soybean area has been sowed in the country, the highest mark in the last 5 years.… Continue reading

By Roberta Paffaro

Driving a tractor on a farm, leading employees across different functions, directing and being responsible for sales and risk management. When you imagine it, I bet you may be thinking that men do these kinds of jobs. While men are still the majority for leaders in agriculture in Brazil, research developed by Brazilian Institute of Geography and Statistics (IBGE/2017) has proven that women are conquering their space. For every 10 farmers, two are female. In Brazil, young female farmers are building a more successful agribusiness, including technology and innovation in the field. 

But it is not that easy. I have been working in agribusiness for more than 12 years and travelling to main producing areas in Brazil, Argentina, Uruguay and Paraguay. I started realizing an increase of women participation in my lectures about risk management. One day, I met a farmer and she shared her life story with me.… Continue reading

By Daniele Siqueira

I’m here again to bring you a new update on Brazilian soybean and corn crops. In a normal year, about 20% of Brazil’s soybean area would be harvested by now. This year, less than half of that is harvested so far, because the crop was planted later than normal (it was too dry in September and October) and also because overcast skies and constant rains in the second half of January slowed down the crop development.

The delayed crop, combined with virtually non-existent beginning stocks, has had an impact on Brazilian supply and exports, as I warned here months ago. In January, Brazil exported only 49.5 thousand metric tons of soybeans — the weakest result for the month in seven years. In January 2020, shipments reached 1.4 million metric tons.

In February, the vessel lineup shows that 9 million metric tons of soybeans could be shipped by the end of the month.… Continue reading

By Roberta Paffaro

Brazilian agribusiness has been highlighted over last decade for a couple of reasons. It became a major producer and exporter of soybeans in the world. In the 2020/21 crop, despite all the weather issues and late planting, Brazil expects to harvest 129.7 million tons, a 6.8% increase compared to 2020. Brazilian soybeans are the “little darling” of China — the main destination for exports. Brazil already sold almost 90% of all soybean production due to strong prices sustained by the devaluation of the Real in 2020.

What about corn? Brazil has two crops in the year. The first one is between October to December and the second, which is called “safrinha,” is from January to April. The total corn crop production is expected by analysts to be 103.2 million metric tons (mt). 

Brazil became a very important worldwide corn supplier in the last decade. According to CONAB (National Supply Company), Brazil produced 50 million mt in the 2008/2009 crop.… Continue reading

By Daniele Siqueira

The last time I wrote here, in mid-December, there were all sorts of rumors around the 2020-21 Brazilian soybean crop, because it was planted about 30 days later than normal due to irregular rains in September, October and November.

The Brazilian delay was one of the main bullish fundamentals at that time in Chicago. Not that the crop was necessarily headed for a disaster (soybeans don’t fail during the vegetative stage!), but because the delay, combined to virtually zero beginning stocks, would leave Brazil out of the export game in January.

That would make room for more U.S. sales, especially to China — something that is really happening now and helping boost international prices even further, along with a very tight supply and demand balance in the U.S., speculations around the crop development in Argentina (it’s doing fine so far, by the way) and tensions between that country’s government and farmers.… Continue reading

By Scott Irwin, Department of Agricultural and Consumer Economics at the University of Illinois

There is considerable discussion about the potential impact of the current La Niña episode on South American growing season weather and the resulting effect on crop yields. We define a La Niña episode as one in which the actual three-month running mean temperature falls below the long-run average temperature by at least 1.0 C for at least one month during July through December. There have been 11 La Niña episodes over January 1977 through October 2020. On average, La Niña episodes of this type have occurred once every four years. 

The pattern of average corn and soybean yields in years following a strong pre-season La Niña episode provides mixed information for yield expectations. For Brazil:

1. The average corn yield in the 10 years was 0.7 bushels below trend. The average soybean yield was 0.8 bushels above trend.

By Daniele Siqueira

I’m writing this article in mid-December and many of you would probably want me to tell what will be the size of Brazil’s 2020/21 soybean crop. I wish I could, but it’s too early for that. If Brazil grew soybeans in the Northern hemisphere, like the United States does, we would be in July — and you all know that soybeans can stand a lot of stress in July and still have good yields if weather conditions benefit the pod-filling stage in August.

Remember 2012? I spent the whole July 2012 in the Midwest, crop scouting and talking to farmers, and soybeans didn’t look much better than corn. But then good rains hit several areas in August. Too late for corn, as you know, but still a blessing for many soybean fields. And, despite some damaged areas that we can see here and there, Brazil’s 2020 soybeans are in better shape than the U.S.… Continue reading

By Roberta Paffaro, a Brazilian journalist, economist and specialist in agribusiness for CME Group in Brazil

Definitely 2020 was a challenging year in different parts of the world. We have faced a pandemic that no economist or market analyst could predict.

In Brazil, it wasn’t different. Our GDP may close the year in with red. We had millions of jobs lost, companies closed and declared bankruptcy and inflation is around 3.45% this year. The government is controlling the inflation through our interest rate that is 3% per year now. When Brazilian Central Bank reduces the interest rate, it is a trend that credit becomes cheaper, bringing incentives to production and consumption and stimulating economic activity.

Regarding credit lines, it should be a good sign to Brazilian farmers, right? Well it is not that simple. We have in Brazil what we call Harvest Plan (Plano Safra) that offers credit lines with lower interest rates to farmers than those set at the market.… Continue reading

By Danielle Sequeira, AgRural

The last time I wrote here was in late March. Brazil was harvesting its 2019/20 soybean crop amid all the uncertainty brought by the COVID-19, which had already made a lot of people (including myself) start working from home by then. Eight months later, I am back in the office, but things are not exactly normal yet. Who could tell, above all things, that Brazil would be importing soybeans from the US?

Despite all the problems caused by the pandemic, including, unfortunately, 166 thousand people dead so far (0.079% of the Brazilian population, very close to the rate seen in the US), Brazil was able to export very quickly in the first half of 2020.

Spurred by the strong demand from China and a weaker currency (a direct result of the risk aversion brought by the pandemic and of domestic problems caused by the political polarization that only got worse with the new virus), Brazil shipped 68.8 million metric tons of soybeans in the first six months of 2020, compared to 51.2 million in the same period last year (+34%).… Continue reading

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

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

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

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