South American Crop Consultant Dr. Michael Cordonnier says soybean yields in Rio Grande do Sul (RGDS) could set a new record and propel the nationwide crop estimate a little higher. He also believes favorable yields in RGDS offset the recent drier pattern in northeastern Brazil, which is why he raised his Brazilian soybean crop peg by 1 MMT to 106 MMT and has a neutral to slightly higher bias toward the crop.
Additionally, Cordonnier says around 45% of the Brazilian soybean crop has been harvested, with 76% of the crop harvested in Mato Grosso. Both are above the average pace, but Brazilian farmers have been slow sellers of their new-crop soybeans due to low prices, logistical problems, increased private storage capacity and a Brazilian currency that has been moving against them.
However, Cordonnier notes the country’s currency has weakened recently and if that continues, it would support domestic prices. “For Brazilian farmers, the currency exchange rate is often times just as important in determining domestic prices as the international price of soybeans,” he notes. “A weaker currency usually translates to improved domestic prices in Brazil.”
“The bottom line is that I think farmer selling in Brazil will start to pick up again over the next few weeks, but it probably will not be robust any time soon,” says Cordonnier. “Brazilian farmers have been constructing additional on-farm storage in recent years, which will allow than to hold off on selling some of their remaining soybeans. In the past, Brazilian farmers were rewarded with higher prices by waiting for a weather concern to develop in the United States. It remains to be seen if waiting for a better price will be the correct strategy this year for Brazilian farmers.”
| Dr. Cordonnier 2016-17 Soybean Estimates | Est. | Maximum | Minimum | 2015-16 |
in million metric tons | ||||
| Brazil | 106.0 | 110.0 | 104.0 | 95.5 |
| Argentina | 54.0 | 55.0 | 52.0 | 56.0 |
| Paraguay | 9.1 | 10.0 | 8.5 | 9.0 |
| Bolivia | 3.1 | 3.5 | 2.7 | 3.0 |
| Uruguay | 3.0 | 3.5 | 2.7 | 2.0 |
| Total | 175.2 | 183.0 | 169.9 | 165.5 |
| Dr. Cordonnier 2016-17 Corn Estimates | Est. | Maximum | Minimum | 2015-16 |
in million metric tons | ||||
| Brazil | 86.0 | 92.0 | 84.0 | 66.0 |
| Argentina | 36.0 | 37.5 | 32.0 | 27.0 |
| Paraguay | 3.2 | 4.0 | 2.7 | 3.1 |
| Bolivia | 0.7 | 1.0 | 0.6 | 0.7 |
| Uruguay | 0.4 | 0.6 | 0.3 | 0.4 |
| Total | 126.3 | 130.6 | 119.6 | 97.2 |
Cordonnier left his Brazilian corn crop, as well as his Argentine estimates, unchanged this week. He has a neutral to higher bias toward the Brazilian corn crop as full-season yields continue to be good and safrinha corn planting is around 92% complete in Mato Grosso.
Meanwhile, Cordonnier has a neutral to slightly higher bias toward the Argentine crops and says the only possible threat to the soybean crop is a repeat of last year’s heavy flooding. “Baring more heavy rains, the Argentine soybean estimate might increase another 0.5 MMT to 1.0 MMT,” he states.
