Commentary

Pretty weather in Brazil clouds markets

Ag Marketing IQ: With no weather threat looming over the soybean and safrinha crops in South America, downward pressure pushes grain prices.

Pam Caraway, Farm Futures executive editor

November 23, 2024

4 Min View

Smooth sailing at this point in Brazil’s production cycle continues to pull down prices, says Matthew Kruse, president of Commstock Investments.

Factors adversely impacting price include:

No weather threats on the horizon during the critical December/January soybean growing season in Brazil and Argentina.
Planting for second-crop corn, known as safrinha, likely will be on-time.
USDA’s crop estimates for second-crop soybeans may be low.

“Looking out into mid-December, we don't really see any weather threats,” Kruse says. “And I think that's going to be weighing pretty heavily on the market. Right now, in the January contract [we have] pretty solid support at that $9.73, area. And if that doesn't hold, I think the market will continue to gradually move lower.”

Looking back to a year ago, Kruse reminds farmers that the soybean market rode a $1.25-$1.50 rally in November over dry conditions in Mato Grosso. As the weather returned to normal starting around Nov. 20, prices collapsed and that fall continued into February.

Contrast that to current conditions. “I spoke with one grain trader that says they've never seen overall conditions as good and positive in Brazil right now in recent memory. Another analyst described growing conditions in Argentina as being perfect so far,” Kruse reports. “Now it's still early in the growing season. Obviously, we know that drought can pop up quickly and things can change.”

Related:3 pivotal points for holiday grain price moves

What’s more likely to change is USDA’s production estimates, Kruse says.

“The USDA already started out with pretty lofty production goals for South America,” Kruse reminds farmers. However, he notes, “Brazil overexpanded their acres over the last several years, and so their production is increased accordingly.”

As of it’s Nov. 11 production report, USDA’s Foreign Agricultural Service estimates for soybean production in Brazil include:

Production. A record 169.0 million metric tons, unchanged from October, but up 10% from last year and 18% above the 5-year average.
Harvested area. A record 47.3 million hectares, up 3% from last year and 13% above the 5-year average.
Yield. Up to 3.57 tons per hectare, rising 7% above last year and 4% higher than the 5-year average.

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About the Author

Pam Caraway

Pam Caraway

Farm Futures executive editor

Pam Caraway became executive editor of Farm Futures in 2024. She has amassed a career in ag communications, including leadership roles in editorial, marketing and public relations. No stranger to the Farm Progress editorial team, she has served as editor of former publications Florida Farmer and Southern Farmer, and as a senior staff writer at Delta Farm Press.

She started her writing career at Northwest Florida Daily News in Fort Walton Beach. She also worked on agrochemical accounts at agencies Bader Rutter and Rhea + Kaiser.

Caraway says working as an ag communications professional is the closest she can get to farming – and still earn a paycheck. She’s been rewarded for that passion and drive with multiple writing and marketing awards, most notably: master writer from the Agricultural Communicators Network, a Plant Pathology Journalism Award from the American Phytopathological Society, and the Reuben Brigham Award from the Association for Communication Excellence.

See more from Pam Caraway

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