The state of Rio Grande do Sul (RS) has been facing heavy rains that have led to one of the worst floods in its history, with some regions receiving more than 100mm of rain in recent days.
More than 130 municipalities were affected, resulting in 24 deaths, with a dam burst in the Serra Gaúcha region. In addition, there have been numerous landslides, damage to infrastructure, rivers overflowing and roads blocked. The state governor described the current scenario as the greatest tragedy ever faced by Rio Grande do Sul.
Fig. 1: Accumulated Precipitation - Last 7 days - Deviation from Normal (mm)
In addition to the humanitarian impact, the weather event has brought great volatility to the grain markets, given that the state produces a large amount of soybeans, corn and wheat.
Fig. 2: Soybean Production in Brazil by State and Municipality (mt) 
First of all, it's worth remembering that the soybean harvest in the state is already well underway. By Thursday, the harvest had reached 76% of the area planted in the state, an advance of 10 percentage points on the previous week, but it was interrupted after storms hit the crops this week, Emater said in a report.
With the rains, the pace of harvesting is lagging behind the same time last season, when it reached 77%. The current harvest rate is also behind the historical average for the period (83%).
As a result, around 5M mt of soybeans are still "in the ground" in RS and at risk of impact from the floods. In the case of corn, in addition to the state producing a smaller volume (around 5M mt are expected for the 23/24 harvest), the percentage harvested is also higher - 83% - leaving less than 1M mt at risk of impact from the floods.
Fig. 3: Soybean Crop Progress - Rio Grande do Sul 
As a result, the market is turning its attention to soybeans. It is still very difficult to determine how much of the soybeans that are yet to be harvested will be affected. The fields are still flooded in the most affected regions, and the forecast for the next few days shows continued rain, making it difficult for these areas to dry out and for harvest work to resume.
Fig. 4: Expected Accumulated Precipitation over the next 7 days - Deviation from Normal (mm) 
However, local agents are already working on a reduction of 1 to 2M mt in the state's crop, not to mention that the excessive humidity is likely to cause quality issues. Logistics issues have also had an impact on the entire production and consumption chain, with significant consequences for the poultry and pork sector. With roads and bridges blocked, farms are unable to receive feed and send animals to slaughter plants in the state, the third largest in terms of chicken and pork production.
It is still difficult to pinpoint the total impact of the floods and heavy rains in Rio Grande do Sul on the soybean crop. The first estimates point to an impact of 1 to 2M mt, but many areas are still flooded and the forecasts are for continued rain over the next few days throughout the state.
The only certainty is that the entire grain production and consumption chain will be impacted by the catastrophe, and that the weather in Rio Grande do Sul will continue to bring volatility to soybean prices in the coming days.
