South America Calling

Agroconsult Lowers Brazil Soy View, Situation Delicate

Soybean crops across a broad eastern strip of the Brazilian grain belt are in urgent need of rain after a dry first half of January, Agroconsult, a local farm consultancy, said Thursday.

The consultancy lowered its soybean forecast by 800,000 metric tons to 93.9 million metric tons (mmt) in January due to the situation and said its figure could be lowered further unless it rains significantly in the next 10 days or so.

"It has been exceptionally dry in Bahia, for example, and heavy rain isn't forecast. Losses could easily mount there," Andre Pessoa, an Agroconsult director, told journalists in Sao Paulo.

The dryness issues are concentrated in the northeastern states of Bahia, Piaui, as well as in the southeastern state of Minas Gerais and parts of Goias in the center-west.

However, the outlook in the big-producing states of the south, Parana and Rio Grande do Sul, is very good, as it is in Mato Grosso and Mato Grosso do Sul.

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When questioned about farmer complaints of dryness in Mato Grosso, which produces about a third of Brazil's crop, Pessoa noted that while precipitation in the state had been well below average, it had still been sufficient for most crops and forecast rains over the next few days should resolve outstanding soil moisture issues.

"There is some issue with crops in eastern Mato Grosso on land that has been recently converted to grain and land that is sandy, but the problems aren't generalized across the state," said Pessoa.

First-crop corn is also suffering in Minas Gerais and Goias, although potential losses there have been offset by good yields being registered in the southern states.

Agroconsult pegs first-crop corn output at 30.0 mmt, down 5% on the year before.

The big surprise is second-crop corn area, which Agroconsult puts at 24.0 million acres, up 2.5% on the year before, despite corn prices that offer negative returns in more remote regions.

The recovery of corn prices in December and January and a devaluation of the real has prompted Brazilians to plant, albeit with less technology, Pessoa explained.

"We were hearing talk of a big drop in area last year, but it appears farmers have made a late decision to plant corn," said Pessoa.

As a result, Agroconsult forecasts a 3.7% expansion in the crop to 50 mmt this season, yet another record.

Pessoa was speaking at the launch of the Rally da Safra crop tour, which will assess soybean and corn production across 12 states over the next six months.

(AG)

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Glen Nixon
1/25/2015 | 4:21 PM CST
If coffee and sugar cane are at 50 percent of normal production ,water res.are 6 percent of normal how are corn and soybeans doing so well?