A representative of some U.S. investors got hold of me last week to ask what Brazil’s 2017-18 soybean yields are going to be. They had been alarmed to read those yields would drop this year. Wasn’t that a sign of something terrible happening? I mean, hasn’t Brazil faced rain issues already this season?
The administration says that even though Brazil’s soybean area will rise between 2.1% and 4.2% this season, production is likely to be lower than last year. But last year was exceptional in terms of yields. I told them that many ag economists throw out the high year and the low year when talking about trend yields because nature can be so volatile.
At any rate, given that the Brazilians like to talk in terms of ranges, they say they’ll end up having planted between 34.6 and 35.2 million hectares of beans this season—up a likely 3.2% from the 2016-17 range because soybeans still remain one of the most liquid investments a Brazilian producer can make.
Blend in volatile prices to volatile weather conditions, and, well, it’s just not going to make a guy in tassel loafers happy as he draws out the spreadsheet.
An agency of Brazil’s Ag Ministry said that the 2017-18 bean crop will come to (again, a range!) between 106.4 million and 108.6 million metric tons, representing a slight increase over the agency’s previous-month estimate. But that’s still down from last season’s nearly 114 million-tonne soy crop, which was, well, one of those years, weather-wise.
Meanwhile, this year with its threat of a La Nina later in the season, is turning out to look a little brighter for the Brazilians. You’ve been reading about the short rainfall they’ve suffered, of course. But, just as the weather gurus predicted, the rains across most of the soybean area in Brazil have started—or are about to start. So I look for production year weather to end up having been mostly normal, with the added caveat, of course, that local conditions can vary from the norm.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.