Weather impacts reduce Brazilian soybean production

DEKALB, Ill. — The No. 1 soybean and corn production area in Brazil has been impacted by drought during the current growing season.

“Drought has impacted central Brazil at the peak of planting season since September and especially Mato Grosso, while the southern part of Brazil has seen too much rain” said Joana Colussi, postdoctoral research associate in the College of Agricultural, Consumer and Environmental Sciences at the University of Illinois.

“The dry weather and high temperatures during the last three months have forced the replanting of soybeans in some areas in Mato Grosso and we know replanting is never the same in terms of yields,” said Colussi during a presentation at the Illinois Farm Economic Summit, hosted by farmdoc and U of I Extension.

Soybean harvest in the center-west of Brazil typically starts around Jan. 10.

“But it started the last week of December in some regions,” Colussi said. “The results have been very different across Mato Grosso with stress in some regions and other regions have very good conditions.”

The situation is completely different in Rio Grande do Sul.

“November was the second wettest in over 30 years so parts of southern Brazil experienced flooding in November and December,” Colussi said. “But despite the excessive rain, the forecast is for a full soybean crop season.”

Brazil’s forecast for soybean production is 5.6 billion bushels, down 5% from last year.

“There’s a consensus that Brazil will not have a record soybean crop this season,” Colussi said. “But Brazil will still produce a lot of soybeans, the second highest number in history.”

This is partly due to the increase in acreage of soybean production.

“The last decade, Brazil has increased acreage every year and this year the increase was 3% from last year,” the U of I research associate said.

With the weather stress, Colussi said, the soybean yields for Mato Grosso farmers are the lowest in 40 years.

“Brazil is very big, so sometimes the losses in one state are offset by gains in other states,” she said.

Colussi compared the soybean production costs for farmers in Mato Grosso to farmers in central Illinois.

“Costs have been higher in Mato Grosso than central Illinois since 2016 mostly due to higher fertilizer and pesticide costs,” she said. “The higher cost has been driven by currency fluctuations, global market volatility and heavier reliance on fertilizer imports because Brazil imports more than 80% of its fertilizer needs.”

However, the cost for soybean seed is higher in Illinois.

“The majority of the seed for Mato Grosso farmers is grown domestically,” Colussi said.

Farmland prices in Brazil have increased by large amounts over the past few years especially in areas used for grain production.

“Over the last three years, average cropland has more than doubled, driven by higher net farm incomes, low interest rates and strong investor demand,” Colussi said.

“Cropland in Paraná is $8,000 per acre, $4,000 per acre in Mato Grosso and $1,000 per acre in Pará,” she said. “Paraná has some of the most productive soils in Brazil and it is also close to the ports.”

The delayed soybean crop in the center-west part of Brazil increases the likelihood of problems for the second corn crop.

“More than 70% of the corn production is from the safrinha crop and it must be planted from January to the beginning of March,” the research associate said. “Otherwise the risk increases a lot because the dry season in the central west starts in the middle of April to the beginning of May.”

Due to the current delay in the soybean crop season combined with a smaller acreage, Colussi said, there is a 10% reduction in the corn production forecast compared to the previous season.

“Corn production is projected to be 4.6 billion bushels,” she said. “Total acreage is expected to decrease by 5% to 52 million acres, but faced with the increased risk of growing outside of the ideal planting window, farmers could reduce the corn acreage even more in this crop season.”

Heavy rainfall has damaged the first corn crop, which is only planted in the southern part of Brazil.

“It is not possible to have a safrinha there because of the climate so they do wheat for double cropping,” Colussi said. “The first corn crop is expected to decline by 8%.”

Argentina Outlook

So far, the outlook for the season in Argentina is good despite some challenging weather conditions.

“For Argentina, the most important month is February, which is equivalent to August for Americans,” Colussi said. “For the early corn, 75% and 50% of the first soybean crop are rated very good to excellent as of the first week of January.”

“After three years of a lot of weather problems in Argentina caused by La Niña, now Argentina is seeing the chance of a full crop,” the research associate said. “The forecast for soybeans is 1.8 billion bushels, which is double the previous crop.”

“A bumper soybean crop in Argentina could help offset a forecasted production decline in Brazil,” she said. “Paraguay and Uruguay should increase their production, so South America should have a larger production compared to last year.”

In December 2023, Javier Milei was elected the new president for Argentina.

“The country is a big food exporter and it used to be one of the wealthiest nations,” Colussi said. “But mismanagement has destroyed the economy during the last two decades and the inflation rate reached 200% in 2023.”

And, the research associate said, around 40% of the population is in poverty.

“It is very sad and one of the roots of the problem is government overspending,” she said. “On the first day Milei was in office, he cut Argentina’s government ministers in half from 18 to nine and started what he calls a shock treatment.”

The goal is to stop the rising inflation rate.

“He said in the short term the situation will be worse, but the medium and long-term situation will be better,” Colussi said.