Here is where things stand for Brazil’s major agricultural products at the start of the New Year
Soybeans – a stubborn early drought eventually gave way to adequate rainfall, but too late to maintain the second crop window for some farmers. Conab (Brazilian national supply agency) surprised some by raising the soybean production forecast to 95.8 million tons, based on increased planted acreage and more regular rainfall. The phytosanitary emergency in response to the voracious Helicoverpa caterpillar has been extended in key Brazilian agricultural states. Last year’s soybeans followed by soybeans experiment (soybeans replacing corn as the ‘safrinha’ crop) can be classified as a phytosanitary failure and an economic success, as rust and pests proliferated but farmers earned more from double soybeans than they did from corn. Double cropped soybeans is an unsustainable practice that threatens the Brazilian soybean industry as a whole and it should be banned as soon as possible. Look to the Ministry of Agriculture for leadership on this important issue. The press should be addressing this issue and is not. January 19th Update – The soybean-free phytosanitary period in Mato Grosso has been expanded from 90 to 120 days
Corn – corn production is generally expected to decrease, reflecting an overall smaller ‘safrinha’ crop due to delayed soybean planting driven by early season drought and poor financial prospects for the crop. But hold on to your seats, now the strong dollar is making corn more attractive. Use of corn feedstock as an off-season supplement to sugar cane for ethanol production is increasing in Brazil.
Sugar cane – sector is in deep crisis, driven by subsidized gasoline prices and drought. The current world trend towards lower petroleum prices will likely hurt the sector, but an increase in the mandatory ethanol/gasoline blend to 27% planned for February should help. The first second generation ethanol plant in the country was recently opened by Raizen.
Cotton – worldwide demand for cotton is expected to grow 3.8% in 2014/15, following a 1% decrease in 2013/14. In 2013/14, supply exceeded demand for the fifth consecutive season. 2014 is projected to be the second best year in history for Brazilian cotton exports.
Coffee – Arabica coffee production fell 15.6% this year, due in part to the strong drought at the start of the year. The producing states most affected were Parana (-66.1%) and Minas Gerais (-18.1%). In contrast, robusta production increased by 20%. A weather specialist has warned of new periods of prolonged drought in coffee growing regions of southern Minas Gerais.
Beef – The headline, translated from the Portuguese, reads: “2014 was the best year of all times for Brazilian livestock (cattle)”. Average prices were high and there were gains across the supply chain. 2014 also saw record exports of US $7 billion. The outlook for 2015 is (appropriately) bullish as Brazil takes advantage of the end of embargoes in several markets.
Exports – 2014 was a good year for Brazilian exports, driven by the opening of many markets, including: Russia, Mexico, Japan, South Africa, China, Korea, Colombia, Iraq, Iran, Egypt and Thailand. Prospects for 2015 continue to be bright.
Reprinted with permission of Mark Horn, president at Mark Horn and Associates LLC