Government revises crop down, but market estimates even greater drop - 01/11/2022 - Commodities Shuttle

Agriculture will experience very different realities this year. In some regions affected by drought, the producer’s account will not close.

The farmer who produces well, as is expected in much of the Midwest, will benefit from the maintenance of commodity prices. External demand and high exchange rate keep prices high.

The assessment is by André Pessôa, president of Agroconsult, a consultancy that showed, this Thursday (13), the damage that the lack of rain will cause in the South region and in part of Mato Grosso do Sul.
This drop in production comes at a time when producers had the highest production costs in recent years.

Difficulties in the supply of inputs, such as fertilizer and agrochemicals, raised the external and internal prices of these products, weighing on the producers’ pockets.

But it won’t just be farmers who will have a difficult scenario. The drought also affects Argentina and Paraguay, suppliers of corn and soybeans to Brazil, mainly to the southern states, the most affected by the weather.

The southern region is where most of the protein production is concentrated, and companies will have to bear higher costs in the acquisition of raw materials, which had already occurred in 2021.

This bill will also reach the consumer’s pocket, since the drought affects rice, beans, corn, soybeans, vegetables and fruits. In some regions, it is not the drought that is reducing the crop, but the excess of rains.

André Debastiani, coordinator of the Harvest Rally, an event that takes place every year to assess the conditions of the crops and the potential for soybean and corn production in the country, says that, in some regions, the damage is irreversible.

There are hopes, however, of an improvement in productivity in important states, such as Mato Grosso, the national leader in production. The beginning of the harvest points to good results, according to Debastiani.
If the South loses productivity due to drought, states in the Southeast and Cerrado may have soybean quality compromised due to excessive rainfall.

Cloudy weather and lack of light slow down the development of crops. In addition, it reduces the weight of the grains.

While the South awaits new rains for the planting and development of crops, the Center-West hopes that they will not occur, since the soybean harvest has already started.

Agroconsult’s figures indicate a harvest of 134.2 million tons, 10 million less than the consultancy projected in September. Despite the 5.4% increase in planted area, this year’s crop will be below the 137.1 million in 2020/21.

Corn crops in the South are even more affected than soybean crops by the lack of rain. Cereal productivity in Rio Grande do Sul is expected to decline 53%; Paraná, 15%; and Santa Catarina, 26%, according to the consultancy.

Agroconsult is more restrained than other consultancies in estimating corn crop failure. She expects a production of 24.5 million tons in the first harvest and 94.8 million in the off-season.

The smaller harvest of corn in the first harvest reduces the supply of the cereal in the first semester. The off-season, however, can be brought forward by a month, as the drought allows for an earlier soybean harvest. With this, the planting of corn can occur earlier.

You prescribe Soybean’s GVP (Gross Production Value) is expected to drop to R$356 billion this year. The 3% drop compared to 2021 will be caused by the drought. Already the VBP of corn will rise to R$ 145 billion, 7% more.

income 2 The data are from the Ministry of Agriculture and indicate the value of the products within the gate. The country’s total GVP, including the main crops and livestock, will be R$ 1.16 trillion. While crop revenues grow 6%, livestock revenue declines 4.4%.

Café At least 82% of the 2021/22 coffee crop has already been sold, a percentage well above the 74% average for the last five years. National production was 56.5 million bags, according to Safras & Mercado.

meats Meat supply will reach 79 million tons this year in China, surpassing the level of 2018, the period before the arrival of swine fever in the country. The greater supply is due to the increase in pork production. Protein imports will be lower, according to Usda.​

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