How Brazil’s Unfavorable Weather Might Elevate Corn Prices in 2024
The weather woes in Brazil are becoming more than just a talk among agronomists and farmers. With nearly two-thirds of the country’s soybean planting lagging behind schedule and regions like Mato Grosso facing potential replanting of substantial acreage, the agricultural landscape is marred by uncertainty.
Reports indicate that Mato Grosso might have to replant up to 20% of its land—a figure that seemed implausible not long ago. An experienced agronomist, covering vast areas in Mato Grosso has even suggested that this estimate might lean towards the conservative side. Specific instances, like one farm potentially replanting half its acreage, paint a worrisome picture of the agricultural setbacks.
The forecast for the coming days offers little respite as the Centre West region braces for scanty moisture and scorching temperatures. Although a glimmer of hope emerges with expected precipitation next week, the damage already inflicted remains a cause for concern.
The imminent challenge for Brazilian growers lies in the potential yield reduction for the replanted areas, sown a month later than optimal. Moreover, these regions, which would have typically served as prime areas for second crop corn in the early months of the year, now face uncertainty regarding their planting prospects.
Consequently, Brazil’s estimates for the second corn crop in 2024 are anticipated to plummet, impacting not only corn but also soybean exports. This delay in Brazil’s export window may present an opportunity for U.S. soybean exports, likely gaining traction starting a month later than usual in February 2024.
While the spotlight often falls on Mato Grosso due to its significant soybean production, the adverse weather conditions resonate across other regions. Reports from neighbouring Goiás echo similar challenges, further compounding Brazil’s agricultural woes.
The personal anecdote of my family’s farm in Minas Gerais reflects the broader narrative of struggle due to drought. With planting progress at merely 30% instead of the expected 60%, the prospect of extensive replanting looms. Halting planting activities in anticipation of improved forecasts underscores the severity of the situation.
Escalating the problem, soaring temperatures, reaching a scorching 102-degree F on our farm and even higher in some parts of Mato Grosso, intensify the challenge. The limited impact of 1-inch rains due to unprecedented evaporation rates exacerbates the plight of farmers.
The prevailing sentiment among producers is disheartening as they navigate unfamiliar territory. Mato Grosso, historically accustomed to excess rainfall, faces the novel challenge of extensive replanting triggered by drought, an unprecedented situation for the region.
As Western Mato Grosso witnesses soybeans struggling through 43 rainless days, the fields resemble a grim sight, hinting at potential losses. Despite the forecast promising some relief in the upcoming week, the extended outlook predicts prolonged dryness and heat, prolonging the agricultural distress.
Conversely, Southern Brazil grapples with an excess of rain, particularly in regions like RGDS, Santa Catarina, Parana, and Paraguay, posing difficulties for their first crop corn.
Argentina, benefiting from more favorable conditions, experiences relatively stable growing conditions compared to its South American counterparts.
The latest crop update from CONAB in November is already outdated, reflecting the rapid fluctuations in the agricultural landscape. The government’s optimistic projection of soybean crop output contrasts starkly with the prevailing conditions, calling into question the accuracy of such forecasts.
The USDA’s recent report adds to the complexities, increasing U.S. soybean ending stocks while Brazil grapples with substantial yield losses. Analysts predict a significant downgrade in Brazil’s crop estimates, highlighting the gravity of the situation.
Ultimately, amidst Brazil’s agricultural turmoil, the impact on global scales dwarfs the recent U.S. stock boost, signifying the far-reaching consequences of Brazil’s weather-induced agricultural setbacks.
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