Rains hold up soy planting in Brazil but dry season not ruled out

Recent heavy rains in portions of Brazil’s southern soybean belt have begun to slow sowing efforts there, but the precipitation may be somewhat welcome for now after dry weather slashed yields last season.

Soil moisture returned to higher levels over the winter and is mostly ample for this year’s planting, though the state hit hardest by last year’s drought once again faces a drying trend, and Brazil’s most productive state is not completely safe, either.

Brazil’s potentially record-breaking soybean crop was 34% planted as of Monday, behind last year’s 38%, and progress slowed significantly in No. 2 grower Parana last week. The southern state was 44% planted as of Monday, the date’s slowest pace in eight years and about 12 points below average.

Planting is also a bit slower in neighboring Mato Grosso do Sul, and both states are set for another round of heavier rainfall over the weekend. This should not yet cause major crop concerns because similarly delayed sowing in Parana, seen in 2020 and 2014, preceded decent soy yields.

But Parana’s large second corn crop, planted right after soybean harvest, is certainly at risk if the soy season becomes delayed. The state in 2021 planted the crop at a record-slow pace, subjecting the corn to unfavorable weather on multiple occasions and resulting in truly horrible yields.

Top grower Mato Grosso has had smooth bean planting so far with 67% of the area sown as of Friday, similar to last year’s speedy pace. The Center West state is among Brazil’s most stable soybean producers as it has not harvested a poor soy crop in seven seasons.

But Mato Grosso’s year-ago success was not enough to save Brazil from a terrible crop, which is a rare occurrence for the top exporter. A third straight season with La Nina, the cool phase of the equatorial Pacific Ocean, should keep analysts on guard as it tends to dry out Southern Brazil during its growing season.

Good soil moisture across Brazil reduces these concerns for now, except in far southern state Rio Grande do Sul, where soybean yields plunged more than 50% from average last year. Soil moisture is still OK, though it fell last month for the first time since February, and a dry October may have continued the trend.

Rio Grande do Sul alternates with Parana as Brazil’s No. 2 soy grower, both exceeding 20 million tonnes each in a good year. Growing conditions in Rio Grande do Sul often resemble those in Argentina, where drought continues slicing wheat yields and threatening the corn and soy efforts.

Both regions may stay on the dry side early next month after a round of showers this week.

La Nina will have traders focused on Southern Brazil and Argentina, but they might want to watch Mato Grosso, where the main U.S. weather model is suggesting a dry start to November. On average, November rainfall in Mato Grosso should exceed October totals by more than 50%.

The European model is much wetter for that period, reflecting recent model biases across the Center West region where the U.S. model is too dry and the Euro too wet. But head-to-head, the U.S. model in this region has been slightly more accurate on observed rains than its European counterpart over the last month.
Source: Reuters (Editing by Matthew Lewis)