Brazil Announces Reduction in Expected Soybean and Corn Production for 2024

In the latest development, Brazil's National Supply Company (Conab), responsible for food supply and statistical data, has adjusted its projections for the upcoming soybean harvest due to unfavorable weather conditions in vital cultivation regions. Despite this revision, Conab foresees a record-breaking soybean crop, yet concerns arise as soybean planting falls behind schedule, potentially impacting global soybean and corn production in the coming months. The agency has also modified its projections for corn production, anticipating reduced planting for the second corn crop, known as safrinha, due to dry weather and low prices.

This article delves into the most recent estimates for Brazilian soybean and corn production for the 2023-24 crop season, with a focus on the impact of the El Niño weather pattern on the country's planting season. Conab has scaled down its soybean production forecast for 2023-24 to 5.886 million metric tons, marking a 1.4% reduction from the previous month's projection. Despite the adjustment, Brazil is still poised to achieve a record crop, surpassing the 2022-23 season by 3%.

Official national data indicates that as of December 9, 90% of the soybean crop is planted, trailing behind last year's pace of 96%. This sluggish planting progress, the slowest since 2015/16, raises concerns reminiscent of that season when soybean yields saw a 5% decline. Compounding the issue, dry weather and elevated temperatures in the past two months necessitated the replanting of soybeans in certain areas. In Mato Grosso, about 5% of the state's soybean acreage requires replanting, with some private consultants estimating this figure to be as high as 10%.

Weather conditions in Mato Grosso during October and November saw precipitation levels at 53% below the 30-year average, with November 2023 recorded as the hottest and driest in 30 years. This challenging environment has led some farmers to shift acreage from soybeans to cotton. Conversely, excess rainfall in southern Brazil, particularly in Rio Grande do Sul, has hampered planting progress, resulting in the second-wettest November in over 30 years.

National Oceanic and Atmospheric Administration (NOAA) models suggest that El Niño will peak in late December or early January, with a greater than 55% chance of at least a "strong" El Niño persisting through January-March 2024. This could potentially exacerbate negative impacts on Brazilian crop production.

The delayed planting progress in the central-west for soybeans increases the risk of planting delays and further challenges for the second corn crop (safrinha). The safrinha must be planted within a specific timeframe, typically from January to early March, to avoid maturing in the dry season starting in mid-April. The current delays, coupled with reduced acreage, have led to a 10% reduction in the corn production forecast compared to the previous season.

The influence of the El Niño weather phenomenon on Brazilian agriculture is becoming increasingly apparent, with high temperatures and drought affecting the Center-West and wet conditions hampering soybean planting in the South. Brazil's soybean planting progress is nearing completion but still lags historical averages by about 10%.

Concerns are now emerging for the second-crop corn due to planting delays, prompting Conab to lower its forecasts for both soybean and corn harvests in Brazil. While it is premature to estimate the potential reduction, several market factors warrant close observation in the coming weeks. If Brazil's soybean planting season continues to lag in December or if El Niño impacts yields, U.S. producers may find opportunities for U.S. corn and soybeans to be more competitive in global export markets.