Dec 28, 2020

Early Weather Concerns Impact Soybean Production in Mato Grosso

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

Mato Grosso is Brazil's largest soybean producing state and the Mato Grosso Institute of Agricultural Economics (Imea) estimates that at least 2.5% of the state's 2020/21 soybeans had to be replanted due to poor plant populations. They estimated that the soybean acreage increased 3% to 10.3 million hectares (25.4 million acres). Due to the irregular weather, Imea lowered the statewide soybean yield estimate to 57.4 sacks per hectare (51.3 bu/ac), which would be down 3% compared to last year. The 2020/21 soybean production in the state is estimated at 35.4 million tons, which is up only 0.2% compared to 2019/20.

In the municipality of Sao Jose do Rio Claro, which is located in south-central Mato Grosso, many farmers planted their 2020/21 soybeans between mid-October and mid-November, which was 3-4 weeks later than normal. The region had below normal rainfall during October and almost no rain during November and early December.

Some of the latest planted soybeans had poor emergence and delayed early growth due to dry conditions and farmers are expecting yield losses in the range of 15% to 20%. Especially hard hit were areas of pastures that were converted to soybeans for the first time. These new areas generally have lower fertility and lower organic matter making them move susceptible to adverse weather.

Imea estimates that farmers in the state have forward contracted 66.4% of their anticipated soybean production compared to 51% last year at this time and 47% average. Farmers only increased their forward sales 2% in November due to concerns about potential lower yields. Farmers have also forward contracted 13% of their 2021/22 anticipated soybean crop.

Imea indicated that the soybean price in 2020 averaged R$ 111.06 per sack ($9.70 per bushel), which was a 65% increase over 2019. The highest price for the year was approximately R$ 170.00 per sack (approximately $14.85 per bushel). It is estimated at about 60% of the forward sales were made when prices were much lower than the current prices.

The conclusion of Highway BR-163 between northern Mato Grosso and ports on the Amazon River in early 2020 was an important milestone for the state of Mato Grosso. With the resulting lower transportation costs, there is now a higher volume of Mato Grosso produced soybeans being sent north to ports in northern Brazil than the traditional ports in southern Brazil.