South America Calling
Alastair Stewart South America Correspondent

Wednesday 03/05/14

Mato Grosso's Soggy Soybeans

Going into the soybean harvest, everything looked rosy in Mato Grosso, Brazil's No. 1 soy-producing state.

Dark-green-leaved plants stood heavy with soybeans across the state following another year of ample tropical rains. Record yields were anticipated.

But then the rain just didn't stop.

Deluges over the last six weeks left some fields under water, causing some crops to be abandoned, and others far too wet to allow combines to harvest.

As a result, there have been reports of beans sprouting on the plant and burned soybeans, as well as high moisture levels on delivered beans.

"We were looking at a fantastic year until the wet February," said Laercio Lenz, president of the farm association in Sorriso, Mato Grosso's top-producing municipality.

It has been a disaster for some farmers. But by no means for all.

When looking at the crop as a whole, the rain has only slightly clipped production in the state, which accounts for about 30% of Brazilian soybean production.

It is still very early to assess the damage, but Mato Grosso's Agricultural Economy Institute (IMEA) estimates that up to 1.8% of the state's crop may have been lost so far.

"The rain has taken the edge off what is still a good year," said Lenz.

With 59% of the harvest complete, according to local consultancy AgRural, yields appear to be averaging around 47 to 48 bushels per acre.

The impact of the rain goes beyond the crop, though.

It has also flooded roads and rendered some bridges impassable in the state.

Access to Amazon ports via the BR163 federal highway has been cut and shipments in Porto Velho, Rondonia, were suspended because of high river levels.

None of these problems spell disaster on their own but collectively serve to increase pressure on the state's already precarious infrastructure.

The flooding was part of the reason that the cost of freighting soybeans the 1,250 miles from Sorriso to Santos port hit a record level of R$330 per metric ton ($140) two weeks ago, even before the majority of the crop had been harvested.

The high freight cost of getting soybeans to port is already Mato Grosso farmers' biggest competitive disadvantage and the rain is just exacerbating the problem.

Thankfully, for farmers in the region, lighter rain is expected to continue over the next week.

Until 10 years ago, Mato Grosso rarely harvested in February, which is still the wet season in the state. But farmers have brought forward harvesting to allow time for a second crop of corn. A damp harvest is the risk they take to be able to double crop.

Mato Grosso will produce 26.7 million metric tons of Brazil's 86.1 mmt soybean crop in 2013-14, according Safras e Mercado, a local farm consultancy.


Posted at 4:13PM CST 03/05/14 by Alastair Stewart
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