Brazil Latest
04/04/12 -- Brazil's corn crop could end up coming in higher than it's soybean crop this year, according to Agroconsult's lead analyst.
Citing hopes for an increase in planted area and better yields from second crop corn the South American analysts have raised their Brazilian corn crop estimate to 64.6 MMT from the 63.7 MMT it projected in March.
Meanwhile, estimates for soybean production potential keep falling with Agroconsult now forecasting output at 65.2 MMT, some 3.3 MMT below where the USDA currently line up.
Enthused by high prices, Brazilian farmers are already eyeing an increase in soybean plantings for 2012/13 to a record 26.2 million hectares, they say. That's up 4% on this season and 2 million hectares, or 8%, more than the 2010/11 area that produced the country's record 75.5 MMT crop.
Interesting Little Pre-USDA Snippet
09/02/12 -- And a great excuse to get the Brazilian arses out of the bottom drawer again. The government-backed CONAB have today increased their Brazilian corn production estimate from 59.2 MMT to 60.8 MMT, I hear. That's within 0.2 MMT of what the USDA said in January, and besides our chums in Washington the highest number on the table.
The reason for the increase seems to be optimism surrounding winter corn production, which is just starting to go into the ground now, right behind summer harvesting of corn and/or soybeans.
In contrast they've trimmed their soybean estimate from 71.8 MMT to 69.2 MMT, almost 5 MMT below the USDA's January estimate and one of the lowest numbers around at the moment.
Our Man In Brazil
23/03/11 -- Despite widespread reports of Brazil's soybean crop having a little shine taken off the top courtesy of persistent rains, it's not like that all over the country according to my newest chum. Here's what he has to say from RGDS today:
"The crop in Rio Grande do Sul is big and biggering!! And that (is) despite relatively low rainfall this last month which has river levels so low that the police are yanking chopped-up cars out of some of them (thieves dump them there after stripping out the best bits). However (with) the rains we received last week with more expected today or tomorrow, the crop looks hot. What is causing the headaches (migraines, in fact) is the problem with sorting out freight. Prices have soared and are soaring more; lorry availability is a problem; drivers are in short supply; storage all across the state is getting very tight and tempers are flaring. In other words, the coming days and weeks look to be fun. Last night I was the last to leave the office but every time I stood up, the phone rang again with someone else requiring an answer ... none of which would/could wait. Think I’ll make an effort to get out of here a little earlier today!"
Brazil Wheat Crop Best In Years
09/12/10 -- Brazilian wheat growers are wrapping up what the describe as their best wheat harvest in years. Despite lower plantings than last season, near ideal weather conditions and increased fertiliser usage has boosted yields - with a crop of 5.6 MMT expected, according to Conab.
That beats last season's production by 12%, and quality is also said to be much better this season. Late rains last year meant that only half of Brazil's wheat crop made milling grade.
Record yields are seen in Parana state, which accounts for around half of the nation's wheat crop.
Brazil To Plant Record Soybean Area For 2011
In their first estimate of Brazilian soybean plantings for 2011, Ag Rural are predicting a record area will be given over to the oilseed. They are calling for 24 million hectares to be planted to soybeans, half a million up on last year, or an increase on just over 2%.
Some of those extra acres will come from corn, encouraged by significantly higher returns from soybeans as CBOT hovers around USD10/bushel.
They haven't put a figure on production yet, although there is some trade talk of a crop in excess of 70 MMT if everything comes together and they are able to replicate the bumper yields of 2010.
At this early stage that's a big ask, especially with La Nina forming in the Pacific Basin. This is a big concern this year, La Nina's last appearance in 2007/08 didn't cause much disruption, but crucially that episode only developed late in the growing season. This La Nina is developing now, before soybean planting has even begun.
La Nina tends to delay the arrival of rains in Central and Southern Brazil, that could hold back plantings, potentially cutting yields.
Hot News
Brazilian authorities have ordered the immediate closure of two ports, including Brazil's largest grain terminal Paranagua, on environmental grounds.
Paranagua, located in the southern state of Parana, is also Brazil's second largest maritime terminal.
The closure has been ordered by the Brazilian Environmental Institute (Ibama), after the management of Paranagua port failed to meet previously agreed environmental commitments, meaning that it doesn't now have a valid operating license.
The neighbouring port of Antonina is also affected. In total the two are reported to have 13 vessels berthed, 26 scheduled to berth and a further 45 waiting to enter the ports.
No wonder China keep coming back to buy US beans. Meanwhile those front-end soybean premiums look set to remain a while yet. Just imagine if militant Argy dockers decide to sieze upon this as another opportunity to push for more pay too.
How Much Longer Can This Go On?
Imagine being able to get USD9/bushel for wheat, double the going rate - the equivalent of around GBP165/tonne. Guaranteed, no strings for as much wheat as you want to sell. And if by some magic, wheat prices move above that then you can simply sell your wheat elsewhere and bank the extra profit. Nirvana, eh?
Well not quite Nirvana, Parana actually, the largest wheat producing state in Brazil. The government there have set the minimum price at which they are prepared to pay for the best grades of wheat at around USD9-9.25/bushel, and not surprisingly there are plenty of takers.
So many takers in fact that there isn't enough storage to handle all this wheat, especially not since the government silos are already choc-full of corn, which they are also buying at a substantial premium to cash prices.
Of course all this is putting a massive hole into government coffers, so much so that moves are now afoot to lower the minimum levels back into line with cash prices. Farm groups of course are saying that farmers need these prices if they are going to stay in business.
Regardless of what the farmers want, it is clearly unlikely that support levels set at a time of booming commodity prices can be held where they presently are indefinitely. That could have a negative impact on plantings, and certainly inputs for 2011.
Brazilian Wheat Plantings Delayed
Heavy rains mean that wheat planting in Brazil's Rio Grande do Sul is well behind schedule with only around 10% of the anticipated acreage so far in the ground.
Farmers there will be carefully weighing up their options as wheat grown in the state is usually followed by soybeans in November. Planting wheat too late could therefore mean missing out on getting second crop soybeans sown.
Local wheat prices are lower than the cost of production, and well below the government-sponsored support level, just as they are for corn and soybeans too.
The question many growers will be asking is whether there will still be any money left in the government's kitty come harvest-time? If not then they'll have to take whatever they can get locally, which is highly unlikely to be showing them any sort of a profit.
Agricultural Development In Brazil
Here's an interesting video from the FT showing how agriculture is developing in the western Brazilian state of Bahia, which covers an area the size of France: here
Brazilian Soybean Crop 'Not As Good As Advertised'
I read with interest today on the excellent Brownfield Ag Network website that Bob Streit, a crop consultant with Central Iowa Agronomics returning from a recent visit to Brazil, says that crops there "look good — but perhaps not quite as good as advertised."
Wet weather seems to have delayed plantings and led to increased rust incidences, taking the top off yields a bit. Read the full story of what he has to say here.
That ties in with what private Brazilian consultant Kory Melby has been saying for months now. Whilst talk of 68 MMT of soybeans makes good press "it is only a matter of time before we hear talk of a smaller soybean crop in Brazil."
Even so of course, if we are talking 64 MMT or 68 MMT - or somewhere in between - it's still a record. Ditto Argentina at 50 MMT, 51.5 MMT or 53 MMT? That said, the bigger numbers towards the upper end of those ranges are already in the marketplace so maybe something closer to 64 MMT and 50 MMT is modestly bullish?
I still subscribe to the notion that logistics and physical availability (or lack of it) will be more important than ever this summer. US stocks are tight, the USDA will reveal just how tight on Wednesday. Consumers have left themselves short in the confident knowledge that massive crops were coming from South America.
There's just one problem, those massive crops ARE still in South America, and that isn't much use if you need soymeal in Europe tomorrow is it?
Are Brazil Next To 'Do An India'
Storing surplus grain in the outdoors, open to the elements until it rots whilst people go hungry all around is clearly THE big thing this year.
The Indians have set the ball rolling, now the fashion conscious Brazilian is keen to follow:
Soybean Sales Remain Slow In Brazil
I gather that a similar mood is prevailing across the border in Argentina too.
Mato Grosso Soybean Crop Shrinking
This is a very interesting post straight from the horses mouth so to speak, fresh from a twelve day tour of Mato Grosso.
It would appear to suggest that early and medium maturing varieties in Brazil's top producing state are not yielding as well as had been anticipated.
Heavy rain may also be taking the top off yields a little, as well as delaying harvest progress.
That would appear to concur with some estimates filtering through that recent calls for a crop of 68 MMT are indeed "pie in the sky".
Check it out: here
Huge Brazilian Soybean Crop Estimates 'Pie In The Sky'
Some crop estimates pegging this season's Brazilian soybean crop as high as 68 MMT are "pie in the sky", according to respected private consultant Kory Melby's blog (here).
He says that 64 MMT is nearer the mark with Asian Rust and recent searing temperatures taking the top off yields, with some fields "seriously hurt".
Even so, 64 MMT is still a pretty hefty 12% increase on last year's 57 MMT, and comfortably sets a new record production number.
His blog is another that also reports of severe logistical problems in Mato Grosso, with trucks lined up for 25 miles attempting to get into rail terminals destined to take beans to Santos.
The situation has depressed local ex farm cash prices, pushing levels below the cost of production, he says.
One of the reasons behind the logistical problems is the large volume of last season's government-owned corn still sitting in the silos of Mato Grosso. This means that winter corn growers without storage are now having to take whatever they can get for corn, said to be only around 50% of the state-set minimum price of R$13.20 per 60kg sack.
Other reports talk of grain elevators in the region having to store winter corn on the ground for the second year running. It's early days yet, but already there is talk of this situation having a negative impact on both corn and soybean plantings for next season.
Conab have today released their latest estimate on Brazilian soybean production, pegging the crop at 66.7 MMT, the IBGE now say 66.1 MMT and Celeres 65 MMT.
In Mato Grosso, Brazil's top producing state, the soybean harvest is now 25% done, according to Celeres, whilst in Parana, the second biggest producer, the harvest has advanced to 8% complete.
Soybean Harvesting And Cotton Planting In Mato Grosso
Did you see Jimmy's Global Farm on BBC recently? The first episode was from Brazil and featured lots of interesting footage of Brazilian agricultural methods. If you missed it see if you can find it on catch up if you have it, or if not (or for my foreign viewers) try searching for it on BBC iPlayer, the show was originally screened on the 7th Jan I think.
These two clips highlight the astonishing speed with which they get a second crop in immediately after harvesting beans. In the case below it's cotton, in the BBC programme it was corn.
Here's what's going on in Mato Grosso, from the excellent Kory Melby blog, with early planted fast maturing beans being harvested right now, swiftly followed by cotton. No sign of the heavy rains in this case and yields are coming in better than expected for early varieties.
Brazilian Soy Harvest Underway
Although planting of soybeans has only just been completed in some parts of Brazil, the harvest is already underway in other areas.
Farmers in Mato Grosso planted twice as many early varieties of soybeans this year, and the state is expected to have harvested around 4 MMT by the end of January.
Some of the new super early varieties reach full maturity within 100 days from planting, and the benefits from growing them are significant.
Old crop carryover stocks are negligible, after Brazil campaigned aggressively to sell last season's production at the front-end of the marketing year. Processors will therefore pay a reasonable premium for early beans.
These varieties understandably yield less than their slower growing relations, typically around 52-54 sacks per hectare, compared to around 60 sacks per hectare from later maturing soybeans.
Harvesting now however also brings other benefits that outweigh lower yields such as giving growers the option to plant a second crop of corn or cotton, and keeping agrochemical expenditure down to a minimum.
Brazil To Put Wheat Import Tariff On The Chopping Bloc
Nogger's favourite grains website Agrimoney.com is reporting that Brazil might be about to scrap it's duty on wheat imported from outside the Mercosul trade bloc.
Brazil's regular No 1 wheat supplier is Argentina, who in previous years have normally had enough to meet almost all of Brazil's import needs. Of course things haven't gone according to plan for the Argies in the last two years, with the 2008/09 crop wrecked by drought and this year's plantings the smallest on record in a two fingered salute to the government.
So with a wheat crop of only around 7.5 MMT potentially coming out of Argentina this year, and them consuming around 6.5-7.0 MMT themselves, there isn't going to be much left for Brazil's best mates to export this year.
Hungry Brazil are set to consume 11.4 MMT of wheat in 2009/10 according to yesterday's USDA figures, but with their own production badly affected by heavy rains they are likely to deficient to the tune of around 7 MMT this year, say Agrimoney.
Clearly the vast majority of that is now going to have to come from outside the bloc.
Well it's a good job that the shops are still open isn't it? Certainly the US will be fancying their chances of a slice of that action, as Brazilian millers are famously anti-Russian wheat.
Brazil: New Crop Soybeans By Christmas
The window of opportunity for US farmers to have the world soybean export market to themselves is getting ever-shorter.
Not only is harvesting in the US well behind schedule, the early arrival of rains in South America saw Brazilian farmers in Mato Grosso (which accounts for around a third of national production), get off to a flier mid-September.
Taking advantage of significant front-end premiums to be had at the time, many savvy growers in the region planted fast maturing soybean varieties.
Rains have continued to be beneficial since these early beans went into the ground, and reports suggest that some farmers will be harvesting beans before Christmas this year.
That may be a little bit of a two-edged sword, as it may trim a bit off yields. It will however enable them to make the most of the local front-end premiums and get a timely 2nd crop of corn into the ground for harvesting later in the summer.
Plenty of reports I am reading suggest that the usage of this strategy will be widespread this season. That may suggest that the current Brazilian soybean production estimates of around 64 MMT may be a tad optimistic. It would also suggest however that China might switch it's attention away from the US a little earlier than normal, and in addition lead to an increased corn crop in 2010.
Brazil To Increase Biofuel Production
Brazilian President Lula da Silva has approved a proposal to increase the biofuel content of it's diesel to 5% up from 4% previously.
The measure, which takes effect in January 2010, is expected to raise the production of biodiesel in Brazil to 2.4 billion litres next year. Lula da Silva cautioned the industry not to rely on edible soy oil as the main feedstock to make it however, so it would not impact on food supplies.
Brazil has used its status as the world's top sugar producer to promote cane-derived ethanol. Its flex-fuel cars, launched in 2003, incorporate technology enabling them to run solely on ethanol, gasoline, or any mixture of both.
With an under-developed rail network and huge cargoes of agricultural and mineral production travelling thousands of kilometres by road to the country's ports, diesel consumption is a major cost for Brazilian industry.
Brazilian Wheat Crop Set To Disappoint, Imports Increasing
The wheat harvest in Brazil looks set to disappoint this year, with production and quality both seen falling due to heavy rains. The same conditions have badly affected the sugar cane harvest, sending prices scurrying to multi-year highs.
The vast majority of Brazilian wheat is grown in the states of Parana and Rio Grande do Sul. In the former harvesting is around half done, whilst in RGdS cutting is only just getting underway.
Persistent heavy rainfall has fallen in both states across the last few months, as can be seen from this map for September:
Early season hopes that wheat output this season might be boosted by 50% to around 6 MMT appear to have been dashed. In Parana, which accounts for more than half of national output, estimates have been cut from 3.5 MMT earlier in the season to 2.7 MMT now. Whilst it is still too early to have an accurate assessment of production in RGdS, anecdotal reports suggest output of around 2.0-2.3 MMT.
With both states accounting for around 90% of national production, it looks like final output this year might only be around 5 MMT.
The rains have also hit quality hard, meaning that more high-grade bread-making wheat will have to be imported in 2009/10, That could push imports up by around 1 MMT in 2009/10 to somewhere in the region of 7 MMT.
With Argentina only set to produce little more than it consumes this year, that could open the door for US wheat to pick-up some much needed export interest, with Brazilian millers famously anti-Russian wheat.
Brazilian Coop Goes Pop
One of Brazil's largest grain cooperatives has gone into liquidation, according to media reports.
Cooperativa Agropecuaria e Industrial, or Cooagri, which was founded in 1957 was declared insolvent by a court in the Brazilian city of Dourados, according to the local newspaper Valor Economico.
The cooperative had an annual sales revenue of around US$590 million, and almost 1,000 employees.
In February this year the cooperatives members unwisely vetoed a proposal from the board to lease their 18 units in Mato Grosso do Sul to ADM for a period of five years.
No doubt ADM will now attempt to resurrect that deal at a knock-down price. Smart move by the members there!
