Rabobank projects that production of soy in Brazil will reach 149 million tonnes in 2022/23, 21 million more than in 2021/22
11/11/2022
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Rabobank projects a record-breaking production of soy in Brazil of 149 million tonnes in 2022/23 — Foto: Divulgação
The recovery of global soybean stocks will depend on a full crop in South America in 2022/23, said Marcela Marini, Rabobank’s senior grain analyst in Brazil. In the 2021/22 season, drought caused losses in Brazil, Argentina, Paraguay, and Uruguay, which helped to increase prices in the international market and hurt the margins of crushers.
In an event held by the Dutch bank on Wednesday, Ms. Marini warned that La Niña is likely to continue to influence the climate in the 2022/23 cycle. According to the United States Oceanic and Atmospheric Administration (NOAA), there is an 80% chance of the phenomenon lasting until December.
“Last year the [climate] maps dried up starting in December, so we need to follow the development of the crops,” she said.
Rabobank projects a record-breaking production of soy in Brazil of 149 million tonnes in 2022/23 – 21 million more than in 2021/22 – as a result of a 4% increase in the planted area, to 43.3 million hectares, and the recovery of crop productivity.
The problems generated by the low flow on the Mississippi River may reduce the competitiveness of American soybean and open space for the Brazilian crop in the international market. The bank believes that Brazil will export 89 million tonnes next year, 13 million tonnes more than this year. The domestic crushing, in turn, may reach the historical mark of 49.5 million tonnes in 2023.
The high prices of raw materials put pressure on the margins of the industry in China, an important gauge of global demand. “We saw a reduction of 10 million tonnes in global soybean exports to China because of this,” said Ms. Marini.
For 2022/23, Chinese crushing is expected to total 93 million tonnes — the same level as in the 2020/21 cycle, and 6 million tonnes more than in 2021/22 — also boosting imports.
In the case of corn, the Rabobank analyst highlighted the fall in global exports in 2022. Besides having a reduced supply due to bad weather, the United States and Argentina ship less because of droughts in the areas of the Mississippi and Paraná rivers, respectively. Ukraine, on the other hand, has a hard time selling its products due to the war with Russia.
“With all those restrictions, we see room for Brazil to export more in this last quarter,” said Ms. Marini. The positive trend for corn shipments extends to 2023 when the country is expected to sell 45 million tonnes abroad, above the 42 million tonnes forecast by Rabobank for this year.
With strong growth in the second crop, Brazilian production in 2022/23 will be 126 million tonnes, according to the bank. “Climate models show La Niña losing strength in the first quarter of next year, which can be favorable for the second yearly crop,” said Ms. Marini.
The analyst highlighted that one of the main challenges for Brazilian grain production is internal logistics. “We see significant investments in ports, but they are not followed by investments in railroads, waterways, and so on. Freight [prices] was a limiting factor for our shipments at several times during the year.”
Another reason for the segment’s attention is the cost of production, which may go down next year. According to Rabobank’s senior analyst of inputs in Brazil, Bruno Fonseca, the amount invested to plant soybeans grew 45% this year, while corn crops faced a 25% increase. The strong appreciation of fertilizers, which gained traction with the war in Ukraine, is one of the main reasons.
“The margins are expected to continue at good levels due to the prices, but lower than last year,” he said. “We see a lot of last-minute deliveries because producers were expecting a reduction.” For 2023, he projects more attractive input prices with a recovery in global supply.
*By José Florentino, Érica Polo — São Paulo
Source: Valor International