Brazil's soybean harvest 16% complete

PORTO ALEGRE, Brazil -- Brazil's soybean crop is getting bigger and the harvest season is moving along nicely, according to the country's latest estimates.

On Tuesday, Brazil's National Supply Company (Conab) pegged the country's total production of the oilseed at 123.2 million metric tons, as a result of a 2.3% increase in 2020 acreage.

As of this week, 16% of the soybean crop has been harvested.

A reported 30 cargoes of soybeans shipped in the last two weeks shows that Brazilian farmers are taking advantage of a sharp drop in the Real vs. the Dollar. Because Brazilian farmers get paid in U.S. dollars for exported soybeans, the exchange favors selling.

Data from the ship agency Cargonave indicates that the Brazilian soybean exports in February of 2020 would beat the numbers of 2019, when a record for the month was set at 5.0 mmt. Corn sales, on the other hand, have been slow, due to the record nominal price broke in January - R$ 53 ($ 12.9) per bag of 60 kilograms.

Drought Impacts Corn Crop

The drought in the state of Rio Grande do Sul, on the other hand, has pushed CONAB to lower its output forecast for the first corn crop by 1.8%. However, higher acreage of the second corn crop in Brazil's Central states pushes production estimates to 100.5 mmt. The number for the first crop alone would be 26 million metric tons, the second crop would be 73.2 mmt. and the third crop 1.1 mmt. The previous forecast, made in January, for the first crop had put production at 26.6 mmt.

At the center of drought, in Rio Grande do Sul, where nearly 30% of corn was harvested, farmer Ricardo Meneghetti, president of the Corn Growers Association of the state, believes in a much larger drop of production. The Rural Institute of Technical Assistance of Rio Grande do Sul puts total production at 4.0 mmt., while prior to the drought the forecast was 5.7 mmt.

Private consultancy Safras & Mercado, based in Porto Alegre, has a production number for the Brazilian first crop of 21.7 mmt., but also has a higher number for the second crop of 74.9 mmt. This year's first crop would be 12.5% lower than last year, if the Safras & Mercado forecast is accurate.

Meneghetti, a Chiappetta farmer, in the Northwestern part of the state of Porto Alegre, believes production would fall below the 4.0 mmt. easily. The farmer planted 345.9 acres of corn, all irrigated, but still his yields lowered to 160 bushels per acre. The average for the region currently is approximately 105 bushels per acre, while the regular yields with adequate rain are about 180 bushels per acre. Most soybean fields in the region, however, were replanted in time.

"My yields were better because I do irrigate corn, but most farmers here don't. They need to change," defended the grower.

Farmer Meneghetti pushed local farmers and the local state government to have a plan for future drought. He thinks all producers should have insurance, not just loss related, but price insurances combined with futures and option, adequate storage and yet irrigation - an investment that would be supported by the government of Rio Grande do Sul through the "Pro-Corn" program facilitating access to on-farm warehouses and irrigation equipment. The Pro-Corn program aims to reduce the state's grain deficit of 2.0 mmt. that are brought from Central states in order to become self sufficient.

"Farmers need to understand that all what they do to grow soybeans, they should with corn. And they should do a little bit more. Drought someday will come. As the last drought was in 2012, nobody cared about insurance or grain quality," stated Meneghetti.

Usually, the state of Rio Grande do Sul seeks corn from other states by July of each year. Meneghetti thinks that in 2020 will be different. "With this scarcity that probably would be much sooner," added.

Brazil's total corn imports are forecast by Conab to be 1.0 mmt., 500,000 tons less than last year, but higher than the previous average years.

The weather forecast for Rio Grande do Sul, in the next following ten days, makes farmer Gilberto Nicotto from Ijui very apprehensive. According to MetSul, there won't be any rainfall in those days. He lost about 40% of his corn crop and still has 50% to harvest of his 222 acres planted that are not irrigated.

"It was a very poor decision to grow corn. I should have planted all soybeans because with soybeans always there is time to recover or plant again. Corn is a ruthless crop to farmers. I should have remembered 2012," said Nicotto.