In an update from the Federal Reserve Bank of Kansas City earlier this month (“Financing of Ag Production Loans Eases Further”), Nathan Kauffman and Ty Kreitman stated that, "Farm debt at commercial banks continued to ease in the second quarter."
Brazil is expected to produce a record grain crop in 2020/2021, despite the drought that affected planting in some regions. On Tuesday, the National Supply Company (Conab) projected 268.9 million tons of grain production, 4.6% more than 2019/2020.
Also Tuesday, the Brazilian Institute of Geography and Statistics (IBGE) released the first forecast for the 2021 grain crop: 253.2 million tons, 0.5% more than 2020.
The Conab report noted that, “Despite the delay in the rains this year, farmers have accelerated planting.”
As of Friday, soybean planting reached 55% of the estimated area, compared to 56% in 2020. The first season corn reached 54%, compared to 42% last year.
Another factor that contributes to the record is the increase in planted area, according to Conab. This year, the forecast is for 67.1 million hectares to be cultivated, 1.8% more than in the previous harvest. The planted area is also a record.
“With the good results obtained in the last harvests, as well as the attractive market conditions for the commercialization of the grain, the expectation for the 2020/21 crop for the continued growth of the planted area,” Conab said.
Globo Rural writer Raphael Salomão reported that Conab’s estimate for soybean production was revised from 133.673 million to 134.953 million tons in the 2020/2021 harvest, a new record. Corn production should total 104.890 million tons, a record as well, 2.3% more than in the 2019/2020 harvest, considering the three annual cycles for the crop evaluated by Conab.
The article added that despite the “climatic variations,” the expectation is optimistic for the performance of the soybean crop. If the projection is confirmed, it will be an increase of 8.1% compared to last season, according to Conab.
Meanwhile, the IBGE report projects 253.2 million tons of grain production in 2021, 0.5% more than 2020.
With respect to soybeans, IBGE estimated a 4,6% increase in production. According to Carlos Barradas, an IBGE agribusiness analyst, the rising price of commodities in the international market motivates investments in the production of grains in Brazil, mainly corn and soybeans.
“In addition, the pandemic caused domestic consumption to rise and the prices of these grains increased a lot,” Barradas explained.
O Estadão de São Paulo writer Vinícius Neder reported that with the new record in soybeans, Brazil consolidates as the largest world producer, since the harvest of the United States should vary between 122 million and 125 million tons. The 2020/21 soybean crop in Brazil is normally compared to the U.S. harvest that is in the final harvest stage right now, before winter in the Northern Hemisphere.
Valor Econômico writers Fernando Lopes e Fernanda Pressinott reported that the delay to start the soybean planting because of the lack of rain in the main producing regions in September and the first half of October was not enough to reduce the estimate of the Brazilian harvest.
The article pointed out that the drive to increase the area of soybean and corn comes from high prices, never seen before in the country. Firm market demand, and the dollar appreciated in the Brazilian exchange rate, supports the prospects for high prices.
Canal Rural analyst Alexandre Garcia pointed that the growth in corn production is due to increased meat exports, which increases the demand for the input used in animal feed.