World Grain - January 2019 - 76

FEATURE

BRAZIL DRYNESS
NOT ENOUGH TO RATTLE MARKET
Only a slight reduction in soybean production is expected
by Drew Lerner

T

he new year brought in a little excitement to a
"ho-ho-ish" late December marketplace because
of weather adversity in South America. Much of
Brazil, of all places, was advertised to receive below average precipitation during a large part of January while excessive rain was suggested for northern Argentina and Rio
Grande do Sul Brazil. The marketplace was starved for
incentive for a more active trade environment, and for a
brief period all it took was a weather forecasting group to
get a little caught up in the moment to hype up the market
trade interest. From a commodity futures price perspective, the rumor of problems was welcome and sparked a
little more interest in agricultural trades, but is there really
a reason for the excitement?
Brazil's weather was nothing short of ideal going into
December, but then a three-week period of dry weather
evolved in the sandier soil production areas of interior
southern Brazil. The lack of rain and warmer biased temperatures took abundant soil moisture and quickly depleted it, raising some crop stress. The dryness was most
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Brazil subsoil moisture
Bahia

Mato Grosso

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Goias

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76

Sao Paulo

Extremely wet
Wet
Moist
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Marginal
Limited
Dry

Rio Grande
do Sul

January 2019 / World Grain / www.World-Grain.com

©World Weather, Inc.

Mato Grosso

ing pods during the three-week rainfall hiatus, reducing
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to restore favorable topsoil moisture and everyone went
home for the holidays thinking Brazil production was still
looking good. Immediately after the start of the new year,
Brazil's forecast started trending drier, but only after a
welcome respite from the previous dry period had revitalized many crops. The advertised dryness in Brazil was
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receiving much useful moisture for a while. In fact, some
computer forecast programs were suggesting limited rain
for those areas during the balance of January. The forecast
may not be all that wrong, but how important is northeastern Brazil soybean and corn country?
Corn and soybean production estimates vary in northeastern Brazil from 8% to 10%, if we include Tocantins.
That suggests if all crops were lost in the region soybean
production in Brazil would be down a maximum of 10%.
Crops in the region got off to a good start this year. Timely
rainfall occurred early in the rainy season and routine
showers and thunderstorms occurred along with season-
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World Grain - January 2019

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