Brazil will likely boost soybean production 3.4% to a record-high 129.15 MMT in 2020-21, projects the ag consultancy Arc Mercosul. It expects farmers to expand planted acreage at the fastest clip since the 2014-15 season given their strong financial standing and robust Chinese demand for the oilseed. The consultancy expects producers to seed 38.43 million hectares (94.9 million acres) to the crop, which would be a 3.8% jump from last year.
Of note, Pro Farmer Crop Consultant Dr. Michael Cordonnier expects soybean plantings to rise 4.2% to 38.5 million hectares (95.1 million acres), with production expected to swell to 131 MMT. He says this expansion could be limited by the following factors:
- Strong domestic cattle prices that could limit the amount of degraded pastures being converted to soybean and corn production.
- A strengthening of the Brazilian currency compared to the U.S. dollar that could lead to lower domestic soybean prices.
- A large 2020 U.S. soybean crop and disappointing Chinese purchases of U.S. soybeans which could lead to lower international soybean prices.
Brazilian corn producers also had a “very good 2019-20 growing season with record-high domestic corn prices.” Therefore, Cordonnier projects Brazilian corn plantings will climb 2.3% to 18.87 million hectares (46.6 million acres), with production at 105.0 MMT, up 4.4% from Conab’s projection for this year.
Cordonnier elaborates that he expects full-season corn acreage to decline 2% to 4.13 million hectares (10.2 million acres) and the safrinha corn acreage to increase 4% to 14.23 million hectares (35.14 million acres), detailing that Rio Grande do Sul, Brazil’s largest full-season corn-producing state had a “very bad corn crop in 2019-20 due to severe drought.” On the other hand, safrinha corn producers generally had a very good year in 2019-20 thanks to record-high corn prices.
He lists the following possible threats to his forecast for expanded corn acres:
- Dry weather in August and September due to La Nina could delay some of the full-season corn planting which could result in the switching of some of the intended corn to soybeans instead.
- Dry weather in September and October could delay the soybean planting and thus delay the soybean harvest next February and March. That in turn, could push the planting of the safrinha corn past the ideal planting window convincing some farmers not to plant all their intended safrinha corn acreage.
- Continued weakness in ethanol prices could weigh on corn prices in Mato Grosso where more and more of the state’s corn production is being used to make ethanol.
- A strengthening of the Brazilian currency compared to the U.S. dollar which could lead to weaker domestic corn prices.
- A huge 2020 U.S. corn crop that could result in lower international corn prices.