The Brazilian soybean harvest is at 99% - almost finished. Most of the main producing states are already done with the process and, despite weather issues, we can expect this year to have new records in grain production, an estimated of 4.1% growth in comparison to 2020.
Mato Grosso will continue as the top soybean producing state in Brazil. The Institute of Economy and Agribusiness of Mato Grosso (IMEA) published research analyzed planting intentions this fall, showing farmers will increase planting area in the 2021/2022 season. Overall acreage in soybean production, already a record last season, is expected to increase another 3%.
Record prices in recent past harvests were definitely a motivating reason for farmers to transform pasture areas to row crops. Early sales of grain also motivated this expansion.
This heated demand for commodity products worldwide is maintaining high prices. The U.S. and China are the biggest economies in the world and alone both represent 40% of the market. With hefty monetary and fiscal injections, they project economic growth of 7%, well above average.
China is the lead importer of Brazilian commodities. Over a third of all our exports go to China, especially meat and soybean products. If China reaches 7% economic growth it will cause our exports to grow some 22.5% this year, or $258.2 billion. That would result in a $66.4 billion trade surplus, a record in the last five years.
This is good news to the Brazilian Real currency; since a lot of U.S. dollars are coming in it will probably become more valuable.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.