April 20, 2018

TellusLabs Weekly Commentary – April 17, 2018

Author:  Michael Cordonnier/Soybean & Corn Advisor, Inc.

Argentina Soybeans - The improved rainfall in Argentina over the past few weeks came too late for most of the early planted soybeans although they may help some of the later planted soybeans.  The condition of the later soybeans did improve slightly last week, so I thought it would be prudent to hold the soybean estimate steady for a week. The biggest benefit from the rainfall though may be improved soil moisture for the winter wheat, which they will start planting in May.

The soybean harvest was 23.6% complete as of last Thursday, which represents an advance of 8% for the week.  The early planted soybeans were 83% mature and 32% harvested. The later planted soybeans were 25% mature and 1.5% harvested.  The most advanced harvest pace is in the northern core region where 67% of the soybeans have been harvested. In the far southern and far northern regions, the soybean harvest progress is in the single digits.

The soybeans in general are rated 81% poor to very poor and 80% short to very short on soil moisture. The later planted soybeans are rated worse than the early planted soybeans.

According to the Buenos Aires Grain Exchange, the average nationwide soybean yield thus far is estimated at 2,480 kg/ha (36.7 bu/ac).  The nationwide yields are expected to decline as the harvest moves into areas outside of the core production areas. Outside of the core production area, yields are highly variable from 1,000 to 3,000 kg/ha (14.8 to 44.4 bu/ac). Approximately 40% of the soybeans harvested thus far have been from the northern core region where yields have averaged 3,030 kg/ha thus far (44.8 bu/ac).

Argentina Corn - The corn harvest is 24.7% complete according to the Buenos Aires Grain Exchange.  The harvest is most advanced in the northern and southern core regions where the corn is 82% and 52% harvested respectively.  In the far southern areas, the corn is generally less than 20% harvested and in the far northern areas of Argentina, the corn harvest has not yet begun.

The earlier planted corn is 67% mature and 50% harvested, whereas the later planted corn is 26% mature and 0.4% harvested. Even with the recent showers, the corn is still generally rated 80% to 85% short to very short on soil moisture.  The recent rains could still help some of the latest developing corn, so I thought it would be best to keep the corn estimate unchanged this week.

The Grain Exchange estimates the average corn yields thus far to be 7,340 kg/ha (113.0 bu/ac), which is up slightly from last week.  Thus far, approximately 33% of the harvested corn has been from the northern core region where the yields have averaged 8,490 kg/ha (130.7 bu/ac) with a range of 8,000 to 12,000 kg/ha (123 to 185 bu/ac).  Once the harvest moves into lower yielding environments, I expect the nationwide corn yield to decline.

Brazil Soybeans - The Brazilian soybean crop was 85% harvested as of late last week compared to 87% last year and 84% for the 5-year average according to AgRural.  This represented an advance of 8% for the week. The big advance came in the state of Rio do Sul where the soybean harvest advanced 25% last week to 50% complete. In northeastern Brazil, the harvest has been slowed by wet weather, but farmers are managing to harvest between showers.

Domestic soybean prices improve in Brazil – Domestic soybean prices in Brazil registered strong gains last week.  In southern Mato Grosso and northern Mato Grosso do Sul, soybean prices ended last week in the range of R$ 72 to R$ 75 per sack (approximately $9.91 to 10.33 per bushel).  Prices ended even stronger in the state of Parana finishing the week in the range of R$ 85 to R$ 86 per sack (approximately $11.70 to $11.84 per bushel).

The higher prices are due to a number of factors including:  a potential trade conflict between the United States and China, higher premiums at the ports, and a weaker Brazilian currency which closed last week at 3.42 to the dollar, and potential weather concerns with spring planting in the United States.  All of these concerns have encouraged farmers to increase their soybean sales. Up until this point, farmer selling had been slow, but it picked up last week. It is estimated that Brazilian farmers have now sold 52% of their 2017/18 soybean production compared to a 5-year average of 55%.

Brazilians are generally skeptical if an actual trade war will break out between the United /states and China.  Many Brazilian think this is just “bluster” on the part of President Trump. For the time being, it doesn’t matter if it ends up in a “hot trade war” or not, they are happy to take advantage of some of the strongest soybean prices they have seen over the last few years.

Brazil Corn - The majority of the safrinha corn we saw was in pre-pollination with the most advanced corn already into mid-grain filling.  The most delayed corn was 1-2 feet tall and there were a few isolated fields where the corn was maybe six inches tall. The crop looked healthy, robust, with a good color, and the soil moisture was more than adequate.  In some areas, there was standing water in the rows and at the ends of the fields. The safrinha corn in central Brazil is going to do very well (see pictures on next page).

The situation of the safrinha corn in southern Brazil is a little less certain.  Dry weather is starting to be a concern for the safrinha corn in Parana and southern Mato Grosso do Sul.  After receiving generally good rains during March, the weather dried out at the end of March and into April.  In some parts of Parana there has not been any rain for over two weeks and there is not much rain in the forecast.  

Isolated fields of safrinha corn in Parana are already exhibiting moisture stress, and the stress will get worse as long as the rainfall is limited.  The safrinha corn in Parana is 90% in vegetative development, 9% pollinating, and 1% filling grain. The safrinha corn in Mato Grosso do Sul is very similar to the corn in Parana.   

There is also the potential for cold weather and frosts to impact the late planted safrinha corn in Parana and Mato Grosso do Sul.  The region has already had a couple of “near misses” of frost, which is extremely early for such low temperatures. The states of Parana and southern Mato Grosso do Sul can experience a frost by the end of May.  If that were to occur, it would impact the later planted safrinha corn which will pollinate in about mid-May. The bottom line is that the safrinha corn crop in Brazil looks good for the time being, but it still has a long way to go before harvest.  

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