Lack of rain delays planting of beans, soybeans; concerns increase export premiums at the port of Paranaguá

09/11/2024

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In the case of soybeans, Brazilian agriculture’s main export item, the drought has demanded changes to the planting schedule for the 2024/25 season. According to the official calendar, in important producing states, such as Mato Grosso, sowing for the new season should start on the first weekend of September.

The delay in planting is accelerating sales on the spot market. Researchers from the Center of Advanced Studies on Applied Economics (CEPEA) say this movement fuels competition between domestic and international buyers for soybeans.

That is reflected in soybean premiums, a bonus paid on the price of the grain at origin. On Monday (9), premiums for soybeans delivered to the port of Paranaguá (Paraná) were $1.18 per bushel, and, for October, $1.20 per bushel. The CEPEA indicator based on the Paranaguá port has risen 1.35% this month so far, to R$140 per bag.

The drought has also hampered the planting of beans in the country. The sowing of the first of the three national crops began in August, mainly in Paraná, but the dry soil has made the work difficult. According to a survey by the Department of Rural Economy (DERAL), by the Secretariat of Agriculture and Supply, as of September 5th, planting had occurred in only 3% of the area planned for the 2024/25 summer season. In the same phase of the previous cycle, work had reached 10% of the area.

DERAL estimates that farmers in Paraná will plant 131,000 hectares of beans between August and December, an area 22% larger than that of 2022/23. “With the price of soybeans down [compared to previous years], farmers have turned to beans,” said Marcelo Lüders, president of the Brazilian Institute of Beans and Pulses (IBRAFE). If projections are confirmed, production should grow 57% in the state, to 251,000 tonnes.

At the moment, there is a stock of beans on the national market as the third yearly crop has ended—the harvesting was 812,500 tonnes. “In some areas of the Cerrado region, high temperatures increased the incidence of whiteflies, reducing productivity,” Mr. Lüders said.

Farmers have been receiving R$260 per bag of “carioca” beans [pinto beans], or R$50 more than the average for the same period in 2023. “If the weather doesn’t help, we won’t have beans between late October and the beginning of the next harvest,” Mr. Lüders says. “In that case, prices are expected to soar.”

The fires that occurred between late August and early September in São Paulo hit 80,000 hectares of sugarcane in the state. Due to the dry weather in the center south, the mills brought forward the end of crushing for the 2024/25 season, which could increase sugar prices in the first quarter of next year.

“The off-season will start earlier. As the drought damaged the sugarcane fields, there will be few sugarcane, and crushing will end earlier,” said Maurício Muruci, an analyst at Safras & Mercado. In São Paulo, the price of crystal sugar rose 2.5% in August, to R$24.50 per bag.

The analyst believes that the increase in crystal sugar prices on the domestic market could impact the entire food industry that uses sugar as an ingredient, as well as food staples. He said that could reflect on the Extended Consumer Price Index (IPCA) from October onwards. On Tuesday (10), despite the worrying situation regarding Brazilian crops, the most liquid sugar contracts on the New York Futures Exchange, a reference for global negotiations, closed down 1.9%, at 18.47 cents per pound.

Climate issues in Brazil and other important producing countries have fueled rising coffee prices on the international market. On Monday (9), the most traded contracts on the New York Futures Exchange rose almost 4%. On Tuesday (10), they rose another 0.73%, to $ 2.4720 per pound.

“The crops [for the 2025/26 season] are very weak, with high defoliation and drying flower buds. I see only bad consequences of this drought,” said Alexandre Maroti, the owner of 15 hectares of coffee in the city of Bom Jesus, Minas Gerais.

He says he used to produce, on average, 80 to 90 bags of coffee per hectare. At the moment, due to the drought and high temperatures, the yield is no more than 40 bags per hectare. Mr. Maroti foresees a 20% drop in the 2025/26 cycle.

The situation is a little better for larger farmers, who boast irrigation systems. Still, many Brazilian coffee farmers are wary and estimate a drop in harvesting volume until next year. In some states, such as Minas Gerais, it hasn’t rained for four months.

“Coffee prices have soared due to adverse weather events around the world, which could reduce production,” said Rich Asplund, coffee analyst at Barchart. Mr. Asplund points out that Robusta prices also rose—in this case, the increase was due to Typhoon Yagi’s passage through Vietnam, a country that had been hit by severe drought last year. Vietnamese production in 2023/24 was only 26 million bags, while the country’s annual capacity is 31 million per year.

Vicente Zotti, managing partner at Pine Agronegócios, points out that, in the case of arabica, it is necessary to analyze the climate of each coffee region in Brazil to estimate the consequences for the 2025/26 cycle. The extent of the drought varies in each of these areas.

The hot and dry weather led the Citrus Defense Fund (Fundecitrus) to reduce its estimate for the orange harvest in the citrus belt of São Paulo and the Triângulo Mineiro region. A 7.1% reduction was announced on Tuesday (10), to 215.78 million boxes of 40.8 kilograms, or 16.60 million boxes less than the previous projection, in May.

According to Climatempo, since May, the volume of rain was 31% below the forecast. In any case, drought is not the only major issue in orange crops, which are experiencing an increased incidence of greening, a disease that reduces the orchards’ productivity.

The severe drought damages some crops but the dry weather has not caused losses to all of them. “The drought has two sides. It favors some crops, such as carrots and tomatoes, as [low humidity] advances maturation and harvesting,” said João Paulo Deleo, a vegetable analyst at CEPEA.

In the case of potatoes, the harvest window starts in July and runs until early October. However, “when it starts to get too hot in September, harvesting is accelerated so as not to lose quality,” Mr. Deleo says.

The heat and dry climate also accelerate the ripening of some fruits, making them taste sweeter. The analyst points out, however, that most of these crops are irrigated and production costs increase in times like these, which could compromise supply in the longer term.

“Extremely dry periods could affect crops in other ways. Furthermore, it will be necessary to monitor the supply of water for irrigation,” he emphasizes.

(Camila Souza Ramos contributed reporting.)

*Por Fernanda Pressinott, Isadora Camargo, Cleyton Vilarino, Gabriella Weiss, Globo Rural — São Paulo

Source: Valor International

https://valorinternational.globo.com/