Dry weather may delay soy planting in Brazil

The Brazilian soybean planting season begins this week and the forecast is dry weather in the coming weeks in the southern Brazilian soy-producing region, such as Mato Grosso, according to a report published last week by the National Institute of Meteorology (Inmet).

Soybean planting requires rain to retain soil moisture for crop development, and a dry climate may force farmers to postpone the planting process by a few weeks.

Delayed planting may reduce soybean yield and thus decrease total soybean production estimates for the crop year 2019-2020, ending on August 31, 2020.

According to the US Department of Agriculture, Brazilian soybean production in 2019-2020 is projected at 123m tons, an increase of 5% year over year if we consider a normal climate.

Yield may be revised downwards if the dry weather forecasts affect Brazil’s main soy-producing regions, such as Mato Grosso and Paraná, unless over-normal rainfall is observed in the coming months, a commercial source says.

If the US-China trade dispute continues, any downward revision of total soybean production estimates could drive up Brazilian grain prices, another trade source said.

Since the US-China trade dispute began last year, the Asian giant has sought Brazil to meet its huge demand for soy, according to Chinese Customs data.

Any fall in Brazil’s soybean harvest could also put even more pressure on China’s domestic crushers, which are buying expensive South American grains, as the Chinese government charges 33% of the import tariff on US-origin grains.

Late last year, Mato Grosso and neighboring states were hit by a severe drought that reduced the total estimates of Brazilian soy production by up to 10m tons in the 2018-2019 crop, before heavy January rains restored levels of production.

Inmet forecasts moderate rainfall in southern Brazil in October, which could accelerate the soybean planting process in the region, sources said.

The following chart, made by DataLiner, shows Brazilian soybean exports to China and to the world from January 2015 to July 2019:

Graph source: DataLiner/Datamar

Source: Platts

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