From the Furrow – Daniele Siqueira — January 23, 2024

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00;00;00;13 – 00;00;15;00
VOICEOVER
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00;00;15;00 – 00;00;45;08
BRITT
EG. Hello and welcome to from the for a podcast brought to you by Everyday Insights, where each week we talk with subject matter experts on news and topics affecting the grain markets. I’m your host, Brett O’Connell. Today is Tuesday, January 23rd. March 24 Ford closed up three quarters of a cent at 446 and a half, and March 24 soybeans closed up 15 and a quarter cent at 1239 and a half.

00;00;45;11 – 00;01;01;18
BRITT
Turning to our guest this week, we had the privilege of speaking with Danielle Cicada Green, market analyst and agricultural journalist with Agrale. Mike McGinnis, our market intelligence manager here at right, led the interview this morning. Now let’s turn it over to Mike.

00;01;01;20 – 00;01;25;13
MIKE
Hi, Mike mcginnis forever AG. The topic today is Brazil and we have plenty to talk about and we have a lovely guest, an insider, so to speak, in Curitiba, Brazil, that’s in the southern part of the country. We want to say bonjour and to DeMain, to Daniela Siqueira. She is a market analysts, also a part time journalist with AG Rural Commodities.

00;01;25;16 – 00;01;27;20
MIKE
Danielle, welcome to the program.

00;01;27;26 – 00;01;33;08
DANIELE
Hi, Mike. Thank you. Bonjour to you two. Good morning to everyone. Thank you for having me here.

00;01;33;09 – 00;01;56;20
MIKE
Well, we have plenty to talk about. Of course you can. If you’re not feeling the market heat lamp on you, then I’d be surprised. A lot of people are talking about Brazil right now, South America in general, about production and whether it will move the market back to a positive area or not. But let’s frame this up first off, Danielle, for those that don’t know, Brazil is a big country.

00;01;56;20 – 00;02;21;02
MIKE
There are a lot of different stages of production going on right now. You have harvest in Mato Grosso in the northern part of the state or center west, but the harvest won’t get started in the south for a while. And I’ve also heard the planting in some part of the country just finished not too long ago. So give us a feel for the different stages of what is actually going on right now with soybean and corn production, Right?

00;02;21;09 – 00;03;04;27
DANIELE
As I said, Brazil is a huge country and our soybean crop calendar depends on three factors mainly. So the main factor is location, of course, because it’s a huge country. But we also have two other factors which are whether or not a state to grow a second crop after soybean harvest and also the weather patterns. So, for example, right now we have harvests in several states of the country, but we have two states that are the leaders of the harvest place, and those are states are Mato Grosso in Center West and Parana in the south.

00;03;04;29 – 00;03;36;00
DANIELE
Those are states are 2000 miles apart. But even so, they have a similar soybean calendar because of those other factors I mentioned. So sometimes we have two states at the same latitude, but for those other reasons they have different calendars. So it’s a little more complicated than north and south because we can have states that plant together being in the north and being south at same time.

00;03;36;07 – 00;03;56;17
DANIELE
And we will have harvest until May, for example, in Rio Grande do so, which is our south in most states, but also in a week, which is in the northeast of Brazil because of their weather pattern. So it’s a little complicated and we’ll have harvest from January until May in Brazil.

00;03;56;19 – 00;04;22;07
MIKE
And for those that are tuning in, you can see behind me these map of the state of Mato Grosso, and you can see the circle that is the town of Cerezo. And as Daniela just mentioned, when soybeans leave on a truck from that town, it takes roughly a week to get to the port of Paranaque Wah, which is the same distance between Iowa in the U.S. and the Gulf of Mexico in Louisiana.

00;04;22;07 – 00;04;41;19
MIKE
So that gives you the sense of how big the country is and how far those beans could be traveling. I did see a photo or a video actually, of some of the soybeans in here, which is in the northeastern part of the country. And those beans haven’t even flowered. I mean, they look good, but they haven’t even flowered.

00;04;41;19 – 00;05;00;18
MIKE
So they’re in, of course, a slower stage of production. Farmers in Mato Grosso, as I understand it, are about 12 or 13% harvested as of January 22nd. Is that correct? And what is the pace of their harvest and what are some of the yields that you’re hearing coming out of that state?

00;05;00;20 – 00;05;27;14
DANIELE
Okay, that’s true. The patterns on the source, our number for Michael GROSS went to last week is 60%. All their sources saying 14 15% around that. Well, Mato Grosso was the state that had the biggest impact of our dry hot conditions that we face until December. Mato Grosso is our top producer. It normally accounts for 25% of our Brazilian production.

00;05;27;14 – 00;05;57;07
DANIELE
So it’s a huge state and it was very, very complicated for October, also until December because they had very irregular rains and very high temperatures, even by Macaluso standards. So they have lost about 90 metric tons of their crop. It’s about 20% of the crop. Yields so far are pretty bad because the first areas were the most affected.

00;05;57;08 – 00;06;30;17
DANIELE
I can not tell you using Bushes per acre right now, but they are. I can tell that they are up to 50 or 60% lower than normal at this point. Areas planted later we have better yields because weather conditions became more favorable from December on. But even so, Mato Grosso already has big losses. Like I said, we had 50 to 60% yield losses in some areas.

00;06;30;20 – 00;06;56;13
MIKE
And some private analysts have estimated that the yields are coming out around 35 bushels per acre, 20 bushels less than expected. Your numbers are even worse. So I’m sure because of it’s a big a big country, though. Daniela, do you see that the yields will vary? In other words, some yields might not be as bad in some parts of Mato Grosso than other parts because of how big the state is.

00;06;56;14 – 00;07;33;17
DANIELE
Yes, absolutely. And in some areas, farmers really waited for better conditions in order to plant. So we have clients in metro girls that have finished planting by the end of November. But in late December, they were still waiting for more rains to start planting. So those farmers finished their planting in early January after rains became more regular. So those farmers will have better yields for sure, but at the same time they will not be able to plant corn as a second crop because they will miss the planting window.

00;07;33;17 – 00;07;43;27
DANIELE
So that’s a price to pay, but they prefer to wait and have a good soybean crop, then plant. All of them have a proxy here.

00;07;44;03 – 00;08;04;25
MIKE
What is your reaction, Danielle, to some of the private analyst estimates? USDA, of course, was lower on their estimates. This month, but also there’s a producer association group in Brazil who is basically saying the estimates should be way lower. This crop is worse than everybody is talking about. What is your perspective here?

00;08;04;26 – 00;08;31;06
DANIELE
The Producers Association has all my respect, but we have to remember that they are farmers, they are producers, and they get really concerned, really mad sometimes when they see losses occurring in their fields. So I don’t think their number is quite right right now because we still have many things ahead of us. And do we have a final number for Brazil?

00;08;31;08 – 00;09;08;26
DANIELE
Our number right now as we finish on January 11th here at AG Rural is 150 million metric tons. So it’s in the middle of the estimate range that we have today. I think we have potential to have more cuts if we don’t have more rains. Hearing Parana, for example, because now was in very good shape until December. But since the beginning of the year, we have faced very high temperatures and irregular rains in some areas where soybeans are still filling pots.

00;09;08;28 – 00;09;38;19
DANIELE
So we are having losses right now in parallel. And some areas environment is still need good conditions in February to have good yields. So we are losing yields right now here in the States and all three states, like you said, are still flowering, are still blooming. So we still have a long way to go. Granted the so for example, which is our third soybean production state, sometimes the number to that state we harvest only in May.

00;09;38;27 – 00;10;11;16
DANIELE
So we still have a long way to go. We can see many things until then. So right now our number is 150 because Mato Grosso has lost many, many, many fields, has lost many, many tons, metric tons of soybeans. But other states are still feeling pods and many things can happen. So I would say that it will be hard to see a production above 150 million metric tons, but we can see less of that if weather conditions improve in some states.

00;10;11;18 – 00;10;35;19
MIKE
USDA is estimate just for the record as at 157 this January this month. That was below 161 in December. So we keep falling again, as we talked about that association group there saying it should be 135, you’re at 150 with more deterioration occurring. So it should be interesting to see where that number actually ends up. You mentioned that the high heat was the problem for Brazil’s crop.

00;10;35;21 – 00;10;59;24
MIKE
The region that was the worst was the largest growing producing state in the country of Brazil, and that’s Mato Grosso. Here we are in the middle of January. You’re seeing pictures and social network types out there showing both the bad and the good. The market is is really watching almost every day. You know what? The next report is out of Brazil.

00;10;59;26 – 00;11;08;20
MIKE
Can you give us a feel for what you have done personally? Have you been out to any fields? Have you seen some photos from your customers? What are they saying to you?

00;11;08;21 – 00;11;35;15
DANIELE
I don’t go to the fields very often because I have many agronomists here who work with me. So that’s their job and they have visited lots of clients and also other farmers. They have had everything. Like I said, we have pretty bad fields, we have very good fields. And one thing that stands out for me is the situation in eastern Congo.

00;11;35;17 – 00;12;04;21
DANIELE
Also, I think I mentioned that before, but we have clients there who waited for better conditions in order to plant, and they were really desperate because of the weather conditions until mid-December. And then they planted and now they are very optimistic because they have an excellent crop. Well, they will have a very good crop because it’s raining now and February will be also a rainy month because you might have a little.

00;12;04;21 – 00;12;28;21
DANIELE
So it weighs a lot in January and February. So we have to keep in mind that this crop is soybeans and soybeans have a very high capacity of recovery. So, yes, some areas have already big losses and we cannot recover the kind of losses. But in all the regions in much the world and also in other states, we can still have a very good crop.

00;12;28;21 – 00;12;36;09
DANIELE
So like I said, it’s still a work in progress and we will know what’s the real size of the Brazilian soybean crop. Only in May.

00;12;36;13 – 00;12;49;04
MIKE
Farmers are harvesting faster this year. Danielle, what about selling? Are they selling faster or are they going to hold on to this crop as long as they possibly can and wait for a market rebound?

00;12;49;06 – 00;13;32;19
DANIELE
Yes, they have been harvesting very fast. Easier year, faster than normal, and that’s not good because they can do that because of the crop losses. Temperatures were so high in some areas. We have so little rain that soybeans were ready for harvest before the normal dates. So that’s why they are harvesting so fast. And that’s why to they have had yields in some areas when it comes to farmers selling, they are stuck because farmers were waiting for higher prices because they believed that the crop see or in Brazil would take soybean prices higher.

00;13;32;26 – 00;13;58;13
DANIELE
And that is not happening. On the contrary, we have seen lower prices. So they just don’t understand what’s going on. And actually they are really mad at Chicago schools because they were expecting higher prices. So they are stuck right now. We have about 30% of the Brazilian soybean production sold by farmers. It’s more than 24% we had a year ago.

00;13;58;20 – 00;14;11;20
DANIELE
What did last and besides your average, which is 42%. So yeah, farmers will wait to see what will happen with prices in hopes that prices will go higher some time.

00;14;11;23 – 00;14;31;02
MIKE
Danielle, I want to talk about the capacity for Brazil’s farmers to store soybeans or store any crop really, but specifically for this discussion, how much storage capacity do farmers have for soybeans and how long can they store? Because soybeans tend to deteriorate after a while, Right. They’re not stored that great compared to corn.

00;14;31;09 – 00;14;58;26
DANIELE
Yeah, We don’t have enough storage capacity for our crops, especially when we consider the second corn crop, which answers the markets in the second half of the year. So last year we had ice storage there around 92 million metric tons, which is huge, and that makes farmers sell their production no matter if it’s soybeans or corn very quickly after harvest.

00;14;59;02 – 00;15;23;15
DANIELE
And that’s why our exports are so explosive in the first half of the year when we are exporting soybeans. And in the second half of the year when we are exporting corn, because we cannot keep those grains here, we have to keep them moving to the other countries, to importer countries, because we don’t have how to keep them here.

00;15;23;15 – 00;15;49;28
DANIELE
And that’s a big problem because although farmers are holding on to their soybeans right now, they don’t want to sell because they are waiting for higher prices. They can not keep those soybeans for too long. So when the harvest is around 50% or something like that, a stable area or in March, importers, no, that farmers will have to sell.

00;15;50;00 – 00;16;24;04
DANIELE
And that is a big problem because Chinese importers, for example, they know that and they put a big pressure on export premiums because they can bring soybean prices to a target that they have. And prices here fall a lot just because Chinese importers do that. So they know our problems, the problems we have here, we don’t have the storage capacity and we have to explore those soybeans very quickly in March, April, May.

00;16;24;06 – 00;16;34;12
DANIELE
So farmers wait for higher prices, but I don’t think those higher prices will come because of that problem we have here. When it comes to storage capacity.

00;16;34;15 – 00;16;55;04
MIKE
What I’m getting here, Danielle, is the story for Brazil’s soybean production This year has not been told. It’s not even maybe close to being over because there’s so much of the crop that’s still dependent on whether it’s a finished January, but also for the whole month of February. What is the forecast look like for the end of this month and into February?

00;16;55;07 – 00;17;23;20
DANIELE
Well, we have some good rains forecast for the rest of January in north central Brazil. That’s very good for areas planted later, even in macro. Also, but also in other states such as Goias. So how is your eyes and the states in the northeast of the country where farmers plant later than other states? So those rains are very welcome, although in some areas gold rains might result in some harvest disruptions, especially much girls.

00;17;23;21 – 00;17;53;22
DANIELE
But it’s okay. They are used to that because January is a rainy month in that state. Specifically here in Panama. We could use more rains because some areas of the state are suffering with irregular precipitation and high temperatures. The good news for farmers here in Parma is that temperatures are not that high. So we will have kind of cold temperatures here in Parma for the rest of January and for February.

00;17;53;22 – 00;18;22;04
DANIELE
It’s hard to know because, you know, weather forecasts change every day, especially when we have some El Nino like we have this year. But for now, the forecast shows normal rains across the country, which is good. But the problem is that temperatures might be higher than normal again. So that will be a problem in areas that are not with very good so far.

00;18;22;04 – 00;18;27;24
DANIELE
So we have to see. But the main concern for February is temperatures for sure.

00;18;27;26 – 00;18;47;12
MIKE
Okay. And one final question. I know this happens every year. Have you heard anything about farmers, you know, organizing a strike or truckers organizing a strike either at the port or along the highways? I know that they seem to have very good timing. Every year when they call for a strike. What is the buzz there right now?

00;18;47;12 – 00;19;16;28
DANIELE
Anything now? No strike so far. I know that sometimes that happens in Argentina more than here in Brazil, actually. But yes, sometimes we have truckers trying to have a strike because they are not happy with the prices or something like that. But at least so far, we don’t have any problems like that in this season. But we have to keep an eye because even with a smaller crop, we will have logistical problems as we usually do.

00;19;16;28 – 00;19;37;20
DANIELE
We will have lots of soybeans being harvested in March and April, and that brings problems to us because we have lots of soybeans to take to the ports. And it’s also complicated, but we know we are so used to those kind of problems that we can manage. So it’s a little messy. Yes, it is. But we we can manage.

00;19;37;22 – 00;19;47;00
MIKE
Well, very good. And it does seem like the story is yet to unfold in Brazil. All eyes are on South America, as you know. And we do appreciate your time, Danielle.

00;19;47;04 – 00;19;49;15
DANIELE
So thank you for having me. It’s a pleasure.

00;19;49;18 – 00;19;55;06
MIKE
Danielle Siqueira Agro commodities Market Analyst And I’m Mike McGinnis forever and.