South American Update Archive

A look at the impact of the La Niña episode in South American

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.
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Hit-and-miss in for Brazil’s crops

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.

Daniele Siqueira

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

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Brazilian agribusiness: What to expect?

Roberta Paffaro

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

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2020, a year when Brazil imported US soybeans

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

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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.

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.

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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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