South America Calling
Alastair Stewart South America Correspondent

Thursday 01/24/13

Soggy Brazilian Soy

It's that time of year when South American weather problems take center stage in the soybean market.

Of late, the main focus has been dry conditions in Argentina and southern Brazil, which are causing growing concern among farmers there. But I would like to focus on intriguing talk that excessive rains are hurting beans in Brazil's top-producing center-west region.

It has indeed rained a lot during January in Mato Grosso, the No. 1 soy state, Goias, the No. 4 state, and Mato Grosso do Sul, the No. 5 state.

This has hampered efforts to harvest early-planted beans.

In Sorriso, the world's top planting district in northern Mato Grosso, farmers have collected approximately 10% of the soybean harvest, but would have harvested much more were it not for 12 days of persistent rain, according to the local farm association.

The situation is frustrating farmers, who are already behind schedule after planting late and are running against the clock to plant second-crop corn.

But we need a little perspective here. While some farmers are in a battle with time, overall, harvesting isn't that late.

Indeed, the Mato Grosso harvest is actually ahead of last year, with 2.8% collected as of Friday compared with 2.7% in 2012, according to the Mato Grosso Agricultural Economy Institute (IMEA).

"There are reports of some quality problems because of the rain and high levels of moisture in grain delivered to elevators. But the delays are not that bad, and generally the situation is not that worrying," said Cleber Noronha, a grains analyst at IMEA.

The same could be said for Goias and Mato Grosso do Sul.

Meanwhile, the rain has actually eased over the last three days and precipitation will be limited to isolated showers across Mato Grosso and Goias for the rest of the week, according to Somar Meteorologia, a local weather service.

Early-harvest yields have been good, without being spectacular. According to IMEA, the average across Mato Grosso is 45 bushels per acre.

However, the slight below-expectation yields have much more to do with the dry September and October to which these early-planted beans were exposed than wet conditions, said Daniele Siqueira, grains analyst at AgRural, a local farm consultancy.

"Farmers are stressed about the wet weather and this has equated into complaints, but this isn't a big threat yet," she said

She said AgRural may lower its Brazil 2012-13 soybean crop forecast, which currently sits at 82.2 million metric tons, but that would be because of the lack of rain in the south and the early-season center-west dryness, not because of wet weather.

After all, let's not forget that it is supposed to rain heavily in January. Farmers who try to harvest early, in truth, expect these problems.

We also can't forget that while the recent deluges have complicated harvesting efforts, it is nourishing the majority of the center-west crop, which will only be collected in February and March.

Posted at 9:49AM CST 01/24/13 by Alastair Stewart
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