Brazilian cereal producers are expected to start sowing in September. If the weather cooperates, Brazil’s harvest could result in its largest grain harvest in history. The first forecasts for the 2022/2023 season from the National Supply Company (Conab), the national food supply and statistics agency, predict that farmers will produce more than 300 million tons of soybeans, corn, cotton, rice, wheat and beans. This number is 14% higher than last season, when Brazilian farmers harvested around 271.4 million tonnes of grain, an all-time high.

The expected growth in the Brazilian crop is attributed to two factors: a 2.5% increase in planted area and yields 11% higher than in 2022. Yields in 2022 were reduced by a severe drought that affected the southern states of Brazil. Although production costs are expected to be higher in the coming season, they will be partly offset by positive margins resulting from high raw material prices, robust global demand and a favorable exchange rate.

This article focuses on the government’s first official estimates of soybean and corn acreage and production for the 2022/2023 season, which has just begun. Additionally, we discuss the latest stocktaking on supply and demand estimates that are worth watching.

Area and production of soybeans

The 2022-23 soybean crop is expected to be 5,525 million bushels (equivalent to 150 million tonnes), a 21.2% increase from the previous crop (see Figure 1). Soy represents almost half of the total cereals produced in Brazil. Brazilian soybean acreage is expected to increase by 3.5%, to 105 million acres, according to Conab. It would be the first time that the planted area will exceed 100 million acres. Most of the increase is expected to be the result of pasture conversion to accommodate soybean seedlings.

Average yields for the 2022/2023 season are expected to be 17% higher than last growing season, when a severe drought affected the southern states of Brazil. For example, soybean yields in the states of Rio Grande do Sul and Paraná were half of what farmers harvested in 2020/21 (see daily farmdocFebruary 25, 2022).

Last season’s high prices and profits, coupled with the depreciation of the Brazilian currency against the dollar, prompted farmers to increase their planted area. Expected soybean margins remain positive, despite rising production costs, driven primarily by a surge in fertilizer prices. The net operating margin for soybeans in Mato Grosso, the largest soybean-producing state, is expected to fall from 59% last season to 23%, according to Conab.

When Russia invaded Ukraine earlier this year, it was unclear whether Brazil would be able to import enough fertilizer for the 2022/23 season. However, Brazil has not experienced significant fertilizer supply problems for this season. From January to July, Brazil imported 23.6 million tonnes of crop nutrients, including potash and formulated products containing NPK, a 15.5% increase over the same period. a year ago. In value terms, the import bill rose 175.3% to $16.1 billion, according to government data. Brazil depends on imports for about 85% of its fertilizer needs (see daily farmdocMarch 17, 2022).

Table 1 shows the latest soy balance sheets published by Conab on August 24. Brazilian soybean exports in 2022/2023 (February 2023 to January 2024) are forecast at 92 million tonnes, a 22% increase from this season’s estimated shipments of 75 million tonnes. . The forecast is based on available supplies, favorable exchange rates and still robust global demand. The Central Bank of Brazil predicts that the national currency will trade at around 5 real dollars or more to the US dollar until 2024.

Maize area and production

Total corn acreage in Brazil is expected to increase by 2.5%, to 55 million acres, according to Conab. More than 70% of the maize produced in Brazil comes from the second crop of maize (known as safrinha), planted just after the soybean harvest, usually in January and February. The 2022-23 corn crop is expected to be a record 4,941 million bushels (equivalent to 125 million tonnes), a 9.4% increase from the previous crop (see Figure 2).

High domestic and world maize prices are the main drivers for the expansion of maize planting area. The maize net operating margin for the 2022/23 crop year in Mato Grosso, the largest maize producing state, is expected to decline from 9% last season to 7%, according to Conab. The increase in fertilizer prices is one of the main factors in the increase in production costs.

In the 2021/2022 season, Brazil produced 4,515 million bushels of corn, an increase of 31.7% over the previous harvest season affected by severe drought. Maize yields could have been even higher this year had it not been for the fall in production in the southern states earlier in the year as a result of the lack of rain caused by La Niña (see daily farmdoc, June 15, 2022). Average yields for the 2022/23 season are expected to increase by 6% compared to the previous season.

The growth of safrinha cultivation is an opportunity for Brazil to double its corn production in the coming years. Brazil is the world’s third largest corn producer and exporter, behind the United States and China. In addition to having new agricultural frontiers to increase the production of corn, mainly used as animal feed, Brazil is expanding its production of ethanol. Currently, 17 corn ethanol plants are in operation, including 10 in Mato Grosso and 5 in Goiás, two states in the Midwest.

Brazilian maize exports in 2022/2023 are forecast at 44.5 million tonnes, a 19% increase from this season’s estimated shipments of 37.5 million tonnes. Table 2 shows the latest soy balance sheets published by Conab on August 24.

Exports are expected to increase further due to the agreement signed with China in May. The two countries have agreed to an updated protocol outlining the phytosanitary – plant health and safety – requirements for the export of Brazilian corn to China. China has sought to diversify its corn imports, of which about 70% came from the United States and 30% from Ukraine last year. China Moves to Accelerate Brazilian Corn Imports; an increase in shipments from Brazil may still occur in 2022.

Summary

Early forecasts for the 2022/2023 crop year from Conab predict that Brazilian farmers will produce more than 300 million tonnes of grain – which would be their biggest harvest in history. The expected growth of the Brazilian crop will be supported by an increase in the area sown and higher yields. Expected margins for soybeans and corn are still positive, despite rising production costs, driven primarily by soaring fertilizer prices. Brazilian exports of soybeans and corn in 2022/2023 are expected to increase, driven by available supplies, favorable exchange rates and still robust global demand.

References and data sources

Colussi, J., G. Schnitkey and C. Zulauf. “Brazil expects historic Safrinha despite less than ideal weather.” daily farmdoc (12):90, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, 2022 Jun 15.

Colussi, J., G. Schnitkey and C. Zulauf. “The war in Ukraine and its effect on fertilizer exports to Brazil and the United States” daily farmdoc (12):34, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, 17 Mar 2022.

Colussi, J., G. Schnitkey and C. Zulauf. “Soybean prices rise as drought in South America cuts crop.” daily farmdoc (12):26, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, 25 Feb 2022.

Conab, National Supply Company. August 2022. Outlook for Agriculture and Livestock 2022/2023. Brasilia, DF, Brazil. https://www.conab.gov.br/institutional/publicacoes/perspectivas-para-a-agropecuaria/item/18847-perspectivas-para-a-agropecuaria-volume-10-safra-2022-2023

United States Department of Agriculture (USDA), Foreign Agricultural Service. August 2022. Brazil: Oilseeds and Commodities Update. https://www.fas.usda.gov/data/brazil-oilseeds-and-products-update-30

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