Jan 15 / Pedro Schicchi

Crop Forecast: Soy Brazil - 2024 01 15

Another month, another Conab and WASDE combo. Last week, soybean numbers from both agencies aligned with the average expectation, although still slightly above private houses’ numbers.

Following these important reports, our aim in this week’s update is to, well… update our crop number and show a bit of what is behind it. Let me give you the good stuff first: hEDGEpoint’s January crop number is 153.4M ton, down from 160.1M ton in early December.

Behind this decline is a hot and dry December, as is the market’s general view. Still, there are nuances that need to be discussed.

Regarding development, we are right at the “eye of the storm”. The majority of the fields are currently undergoing soybeans' reproductive stages, the most critical for yields.

As of last week (7), Conab reported 63.4% of the total planted area in either blooming or grain-filling stages. Soybeans can be quite resistant to poor climatic conditions early on the cycle, but it is at these stages of development that they are most vulnerable.

As it is known, sufficient hydric availability is especially crucial at this stage, but lower temperatures also help.

Overall, climatic conditions in December were not the best. Temperatures were pretty high during the month and precipitation, on average, was below needed. More heat means more evaporation, which accentuates the issue of lack of water, which certainly affected crops this year.

Still, the latter half of the month saw improvements, a trend that seems to be continuing in January. Temperature in these first couple of weeks have been a lot milder and, thus, beneficial for crops.

On top of lower temperatures, precipitation also improved. On average, a soybean plant needs ~8 mm/day of rainfall to thrive in the reproductive stages of its development.

For a lot of areas, this improvement may not bring higher yields, as the damage done was already irreversible by the time the weather started to turn better. However, for a lot of other areas, there is still time, and these improvements might stop national production from continuing to fall.

Finally, the last input considered in our models is the Normalized Difference Vegetation Index (NDVI). NDVI is used to quantify vegetation greenness and is useful in understanding vegetation density and assessing changes in plant health (USGS). Though not perfect, the measure has a good correlation with yields.

Taking it into consideration there are two factors to notice. The first is that important regions (Mato Grosso, Goiás, Minas Gerais, and MATOPIBA for example) are all below last year's levels and, as such, are very likely to have poorer results, justifying the recent trend in the crop numbers.

The second, however, is that NDVI is mostly around the 20-year average in most states of Brazil, which softens a bit the tone of the failure. In the name of comparison, we can see how much below average were Rio Grande do Sul's crops in 21/22 and 22/23, both severe crop failures for the state.

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Crop Forecast: Soy Brazil - 2024 01 15

Brazil Soybeans - Crop Estimates Update

Right to the point

Brazil Soybean - Area, Yield and Production (M ha, ton/ha, M ton)

Phenology

Soybean Brazil - Phenology in Jan-7

Weather

Temperature Anomaly (°C from normal average)

Precipitation (mm/day on average)

NDVI

NDVI - Mato Grosso, Goiás, Minas Gerais

NDVI - Mato Grosso do Sul, São Paulo and Paraná

NDVI - MATOPIBA

NDVI - Santa Catarina, Rio Grande do Sul

In Summary

Weekly Report — Grains

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