IBGE forecasts record grain harvest of 252 million tons for 2020

The September Systematic Survey of Agricultural Production (LSPA), released last Thursday, October 8, by IBGE (the Brazilian Institute of Geography and Statistics) points out that the estimate for the national grain harvest, already at record levels, has once again been raised and should reach 252 million tons in 2020, 4.4% above the 2019 harvest. Soy, herbaceous cotton, and coffee are expected to reach their highest production levels in the history of the IBGE statistics in 2020.

Corn is also on the rise, and even shows good prospects in the market, but it should not reach the record achieved last year.

The 2020 soybean production has set another IBGE record, with a total of 121.4 million tons, an increase of 7.0% compared to the harvest of 2019 and 0.3% in relation to the August estimate. The legume harvest failed to attain record levels only due to the 39.4% decrease due to a prolonged drought between December and May in Rio Grande do Sul.

“Soy prices remained high, leveraged by the appreciation of the dollar and strong international demand, which is evidenced by the pace of anticipated sales, higher than in the previous year”, comments Carlos Barradas, an agricultural analyst at IBGE.

The estimate for corn, on the other hand, remains below 2019’s record level, but it is getting closer (just short 100,000 tons), being the second-highest level in IBGE history. In relation to the last information, the production estimate grew 0.2%, totaling 100.5 million tons. Both domestic demand (due to increased consumption by meat producers) and external demand (due to the exchange rate depreciation of the Brazilian real) are on the rise.

“The low supply in the market and the high demand for the product drive prices in the Brazilian market, which has been stimulating greater investments in corn crops, mainly in Paraná and in the midwest region. In addition, some corn-based alcohol production plants are being installed in Mato Grosso; this may also increase the demand for corn regionally, enabling greater use of this raw material, with a reduction in logistical costs and, consequently, a decrease in the price gap between different markets,” says Barradas.

On the other hand, coffee is another product with a record estimate, thanks to the Arabica variety, and also offers good prospects for the market according to Barradas. Brazilian production is expected to reach 3.6 million tons, growing 1.7% compared to what was expected in the previous month and 21.5% compared to 2019 when 2.8 million tons of the Arabica variety were harvested.

“We had an unprecedented harvest of Arabica coffee, a product of excellent quality that should allow Brazilian producers to recover important international markets”, points out the researcher.

See the graph below for the history of Brazilian coffee exports:

Brazilian Coffee Exports (HS 0901) | Jan 2017 to Aug 2020 | TEU

Source: DataLiner (To request a DataLiner demo click here)

Cotton has been another highlight in the 2020 grain harvest, with an expected production record of 7.1 million tons, up 2.4% from August’s estimate, and up 2.7% since 2019.

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