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November 8, 2016

Soybean Planting in Brazil 52% vs. Average of 49%

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

According to Safras e Mercado, the soybean crop in Brazil is approximately 52.5% planted compared to 42% last year and 49% average. Soybean planting is most advanced in Mato Grosso and it is least advanced in northeastern Brazil.

Brazilian weather - The weather last week in Brazil was mixed. There were numerous showers in Mato Grosso, but they were unevenly distributed. Southern Brazil dried out last week which was a short term benefit. Northeastern Brazil remained mostly dry last week which is an ongoing concern for farmers in the region.

The forecast for this week in Brazil looks the most favorable for northeastern Brazil. Rain is expected to move into northeastern Brazil this week for the first time this growing season. The region is very dry so it is going to take numerous showers to recharge the soil moisture. The weather this week in central Brazil, including Mato Grosso, looks favorable with chances of rain during most of the week. It looks like it is going to be a dry week in southern Brazil, which is OK for now, but it would not be OK if the dry weather extended past this week.

Mato Grosso - The Mato Grosso Institute of Agricultural Economics (Imea) reported last Friday that 80% of the soybeans in the state have been planted compared to 61% last year. This represents an advance of 12.5% during the past week. The western region of the state is most advanced with 98% of the soybeans planted. In the central region of the state where a majority of the safrinha corn is planted, farmers have planted 94% of the soybeans. Northeastern Mato Grosso is the slowest at 33% planted due to dry weather.

The soybean planting in many areas of Mato Grosso will be completed a month earlier than last year when dry weather delayed the planting. The rapid planting in the central region of Mato Grosso bodes well for the safrinha corn crop. If the weather cooperates next January and February, farmers in the state should have the opportunity to plant their safrinha corn in a very timely manner.

The early season weather has been uneven across the state with some farmers already done planting while others still struggling with dry weather. There are also reports of pest pressures increasing and difficulty in controlling resistant weeds. The situation in Mato Grosso is certainly better than last year, but there are still some concerns.

Mato Grosso forward selling - Imea reports that farmers in the state have been slow to forward contract both their soybean and corn crops. Imea indicated that they have sold 27.8% of their anticipated soybean crop compared to 47% last year. The forward sales of the safrinha corn crop are even further behind with only 18.8% sold compared to 64.9% last year.

Reasons for the slow selling include: lower domestic prices, a stronger Brazilian currency, and memory of the last growing season. During the last growing season, some farmers forward contracted as much as 70% of their anticipated safrinha corn production months before the crop was even planted. Unfortunately, that turned out to be a bad decision. The weather did not cooperate and some farmers did not produce enough corn to fulfill their contracts or pay their production loans. They are currently in the process of renegotiation those contracts and loans. As a result, they are much more conservative in their forward contracting this year.

Parana - The soybeans in Parana are 73% planted compared to the average of 72%. The most advanced planting is in the western part of the state where it is essentially complete. This is also where much of the safrinha corn is planted, so it looks like the safrinha corn will be able to be planted on time. The slowest soybean planting is in the eastern regions of the state where it is approximately 50% planted.

Rio Grande do Sul - The soybeans in Rio Grande do Sul are 9% planted compared to the average of 14.7%. Last week was generally dry and it looks like this week might be a little dry as well. If the current dry pattern extends into next week, there could be some concern about dry soils impacting germination and stand establishment, so the weather in Rio Grande do Sul needs to be watched.

Mato Grosso do Sul - Soybean planting in the state is 65% complete with the most advanced planting in the southern areas and the most delayed in the northern areas. In the southern areas, the planting started on September 15th, while in the norther areas, it started during the second week of October. Even though the rains have been irregular across the state, farmers are generally hopeful that the state will produce a record soybean crop if the weather cooperates.

Farmer selling in the state of Mato Grosso do Sul is slow as well in part due to the higher production costs. The cost of producing soybeans in the state increased 35% this growing season. In the municipality of Dourados, which is located in the southern part of the state, the cost of production last growing season was approximately R$ 1,500 per hectare (about $200 per acre) and it has increased to R$ 2,000 per hectare this season (about $250 per acre). Inputs cost more this year especially to control resistant weeds, which some farmers needing to make three herbicide applications. The conversion to dollars per acre was made using an exchange rate of 3.2 Brazilian reals per dollar.