Brazil begins planting predicted record corn, soybean acres

The expansion for corn is driven mainly by rising domestic corn consumption supported by stronger demand from the livestock feed and corn ethanol industries. But the predicted production decline reflects an expected reduction in yields, following last season’s record-high production and productivity. The increase in soybean acreage is being influenced by strong domestic demand, especially for biodiesel, and international demand.

But there are some headwinds that could slow crop expansion in Brazil.

“Brazilian farmers are planting a soybean crop that also could be financially challenging with a 4% increase in production costs,” Colussi, a native a Brazil, said. “Average gross margins are estimated to fall from $165 per acre to $105 per acre. This is especially for farmers that own the land (80%).”

“We know there are expectations that if an agreement (between the U.S. and China) is not reached soon, the price could be even lower, which will bring even more concern to U.S. farmers,” said Colussi, who noted the premium at ports in Brazil is unseasonably high.

“That’s very unusual for this time of the year because October is the time that the Chinese market would look for U.S. soybeans. And that has not happened,” she said.

Aside from trade, weather in South America will be a focus for the market. Colussi said so far, planting pace in Brazil is behind the five-year average, but aside from some dry and wet spots conditions have been good to get crops started.

“We should watch the weather and see what conditions we’ll have in the next couple of weeks that will impact the planting in Brazil,” Colussi said, noting that a week’s difference in planting can impact yields. “In Brazil, everything that will happen in the first season now will also impact the second safrinha (corn) season.”