Apr 19, 2018

Soybeans in Southern Rio Grande do Sul Impacted by Drought

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

While Brazil is poised to set a new record high soybean production in 2017/18, the farmers in southeastern Rio Grande do Sul are facing a crop disaster due to a prolonged drought. The weather in southern Rio Grande do Sul is often times more similar to Argentina than it is to the rest of Brazil and this year is another example of that. While most of Brazil experienced heavy rains during most of this growing season, southern Rio Grande do Sul suffered a severe drought, very similar to what occurred throughout much of Argentina.

In the municipality of Cristal in southeastern Rio Grande do Sul, farmers have harvested 50% of their 2017/18 soybeans and the early maturing soybeans have turned out to be a complete disaster. The yields of the early maturing soybeans are down as much as 90% in some cases. Soybeans that generally yield 45 sacks per hectare in a normal year (40 bu/ac) are yielding more in the range of 9 sacks per hectare this year (8 bu/ac).

The problem was a lack of rainfall during the critical reproductive periods. According to the president of the local Rural Society, the rainfall during the months of January and February totaled only 0.8 inches.

The later maturing soybeans are little better, but they are still down approximately 50% from normal levels. The yields of the later maturing soybeans are in the range of 25 sacks per hectare (22.2 bu/ac).

Local soybean prices have strengthened and are in the range of R$ 78.00 to R$ 78.50 per sack (approximately $10.75 to $10.80 per bushel), which are good prices if you have soybeans to sell. Unfortunately, some farmers forward contracted more soybeans than they can now deliver, so they must either purchase the soybeans to fulfill their contract or renegotiate with the buyer.

The local corn production was also severely impacted by the drought with some fields being declared a total loss while others are being cut for silage instead of grain production.

Farmers in the region lament the fact that last year hail impacted their summer grain production and this year it is drought. As a result, farmers in the region are going to be undercapitalized which could impact their ability to plant their winter crops such as wheat. Generally farmers in the region like to start planting their winter wheat in the month of May.