Much of Brazil is in a drought pattern, and the effects are noticeable on early soybean yields. Though it’s still too early to make accurate predictions, yields are looking down. Below we’ve got analysis and prediction by region, and the latest on what this all might mean for soybean futures.
Dry Spell in Brazil
Mike Palmerino, DTN’s Senior Ag Meteorologist, reports that the dry spell that Brazil is experiencing is one of the worst they’ve had in several years. As of last week, a high pressure system was covering much of Brazil’s soybean belt. This is causing above average temperatures and lower amounts of rainfall. These conditions were expected to break for a few days and then continue throughout this week. Most of the areas in Brazil growing soybeans are forecast to have average temperatures that are 10-15 degrees above normal throughout this week.
Michael Cordonnier of Soybean & Corn Advisor agrees. Most soybean growing areas of Brazil will have more of the same, with the possibility of conditions changing later in the week. Is all of this hot and dry weather having an impact on Brazil’s soybean crop?
Lower Yields Anticipated
Yes. Cordonnier says that nearly all major soybean producing states in Brazil are anticipated to have lower yields than last year. Early maturing soybean yields are down anywhere between 4 and 30%. Early planted or early maturing soybeans were hit the hardest because they were filling pods during a very dry December. Now, the medium-maturing soybeans are being hit with dry weather as well.
Conab lowered their yield estimates for the 2018-19 soybean crop by 1.2 million tons. This isn’t as low as many analysts expected. It’s anticipated to go down even more in February.
AgRural reports that 2.1% of Brazil’s soybeans have already been harvested, which is slightly ahead when compared to previous years. The warm and dry weather conditions may have caused soybeans to mature at a faster rate.
Early Yield Estimates By Region
Below is a summary of what we know about early soybean yields over different areas of Brazil. Note that a very small fraction of the harvest is completed at this point.
The Mato Grosso Institute of Agricultural Economics (IMEA) has soybean harvest numbers that are ahead of AgRural’s. Soybean harvest is 5.6% complete as compared to 1.2% last year. Mato Grasso usually plants their soybeans a little earlier than most other parts of Brazil, so this difference is somewhat anticipated. In the western areas of Mato Grosso yields are typical for the region.
Parana, the area in Brazil that has been hit the hardest by the warm and dry weather, has reported early soybean yields to be at the mid-20 bu/ac range when normally it should be in the low 50’s. The worst Cordonnier has heard so far in this part of Brazil has been 9 bu/ac in an area that normally expects 57.7 bu/ac. Any rain that hits now will be too late for early planted soybeans. It could however, it could still help soybeans that were planted later.
The Department of Rural Economics (DERAL) has reported 12% poor, 30% average, and 58% good in Parana. Western and southwestern regions of Parana that typically produce 30% of the state’s soybeans have early yields down 40% from initial expectations.
Mato Grosso do Sul
The first soybean yields have come in at 44 bu/ac. Yields last year were 53 bu/ac. Farmers here have been very cautious about forward selling their soybeans.
Rio Grande do Sul
The Soybean and Corn Producers Association of Rio Grande do Sul predicts that state production will be down 6% from last year. The Association of Cereal Companies here estimates production to be down 10% from last year.
This region of Brazil is more prone to flooding, and that has been a problem in certain areas. Soybeans in this part of Brazil are planted the latest, and 32% of the crop is flowering and setting pods.
This area of Brazil produces 11-12% of the country’s total soybeans. The season started off well, but a dry December and January are having an impact. This is an area to watch.
Soybean Futures on the Rise
Tony Dreibus of Successful Farming says that soybeans closed higher on Friday, as investors were concerned about the hot and dry weather in Brazil. Commodity Weather Group says that 20% of Brazil’s soybeans may be at risk.
Soybean futures for March delivery rose 7 1/4¢ to $9.15 a bushel on the Chicago Board of Trade. Soy meal added $2.50 to $314.70 a short ton, and soy oil gained 0.27¢ to 29.04¢ a pound.
We will keep you posted as more more of Brazil’s soybean crop comes in over the next couple of months. Right now, lower yields in Brazil could be good news for US soybean producers.