Camila Fontana: Hello everyone and thank you for joining us. Argus Media offers podcasts about developments in the commodity and energy markets around the world. I am Camila Fontana, Deputy Bureau Chief at Argus based in Sao Paulo. Today it will be my pleasure to chat with Nathalia Giannetti, our Brazil agriculture specialist for the Argus Agri Markets and Argus Brazil grains and fertilizers publications.
She is here to discuss the outlook for Brazil's soybean and corn crops at this final stretch of the 2024-25 season. So, Nathalia, what can we say about the soybean crop now that harvesting is virtually finished.
Nathalia Giannetti: Well, Camila, the 2024-25 soybean crop is already set to reach a record which until now belong to the 2022-23 cycle. And Brazil continues to be the largest soybean producer of the world and maintains a large advantage over the US, which ranks second. Weather conditions were ideal this season in Mato Grosso, which is the largest soybean producer. Mato Grosso also expects a record production this season.
Some other major producers such as Mato Grosso do Sul, Goias and Parana faced a few problems because of the lack of rainfall this season, but these problems were not severe enough to lower the national forecasts. Rio Grande do Sul state was the only one to face significant problems this year. A severe drought hit the state in early 2025 and hampered yields there with some areas losing all their productive potential.
But once again, the optimal results in Mato Grosso more than compensated these losses. This national record follows trends of acreage expansions that take place each year for almost 20 years. The increase for the season surpasses market expectations which were of just 1pc because prices continue to be considered too low amid a global oversupply of soybeans.
But farmers expanded area planted with soybeans by 3pc this year on expectations of stronger demand.
CF: Like you said, forecast of stronger demand, so what is the outlook for Brazilian soybean experts this season, Nathalia?
NG: Brazil is the largest soybean exporter and is expected to export a record volume this year, which could total up to 110mn t because of our record domestic production and also strong Chinese demand. Brazil is now in the middle of its soybean export season and accumulated shipments since the beginning of the year have already reached a record.
China is the largest soybean importer and receives more than 100mn t of soybean soybeans each season. Brazil is China's main supplier with China receiving at least 70pc of the soybeans exported by Brazil each year since 2020. But there is still a lot of uncertainty over how the rest of the year will go for Brazilian shipments to China.
Because of the US tariff situation. As of today, May 8, the US and China have yet to reach an agreement. And if they fail to do so, it is very likely that China will start importing more soybeans from Brazil. That was what happened in 2018 when the US imposed tariffs on Chinese products. But the first impact of China's preference for the Brazilian products should only be seen in the second half of the year.
That is when there is a seasonal shift of demand to the US, which is harvesting their next soybean crop, while Brazil is still in the early stages of planting. It is important to also note that other countries can also occupy the space left by the US, such as Argentina and Paraguay. But Brazil, of course, is the one with the greatest capacity to meet this possible new demand.
CF: And Nathalia, what would this larger demand that you mentioned mean for prices and logistics operations here in Brazil?
NG: Well, Camila, it is difficult to say for sure what will happen with prices because there are a lot of factors that can influence them. But when there is a surge of demand, prices usually rise.
And this could actually offset the pressure from the oversupply of soybeans that is going on right now. This offset was what happened this year. Everyone expected soybean prices to fall as the harvest of our record crop progressed. But the US-China tariff conflict gave some support for soybean prices in Brazil, especially for port differentials.
These are the prices negotiated at ports in the export market, and they remain at positive levels as of now instead of falling to discounts to the CBOT. That was what happened 2 years ago when Brazil was harvesting the 2022-23 crop, which was a record back then. In terms of logistics, higher demand from China could be a problem for Brazil. The second half of the year is when Brazil starts to export more corn.
If China continues to purchase more soybeans and volumes arriving at ports remain at a certain level during this time of the year, there could be long waiting lines to load shipments at ports, for example, which could increase transportation and export costs.
CF: So, Nathalia, moving on to corn, uh, what is the outlook for the 2024-25 crop?
NG: Before talking about the outlook for the season, Camila, I will just go back a little bit and explain how Brazil's corn production works for those who are not knowledgeable of this market. Brazil has three corn crops with the second crop being the largest and most relevant in terms of exports. The first corn crop is planted alongside soybeans and loses ground because of this. Producers prefer to invest in soybeans because of their higher prices and stronger demand.
There is also a third corn crop that is planted in just a few states and represents a small share of the national crop. So, the second corn crop is the most important one, but it wasn't always like this. The second corn crop is also known as “safrinha”, which means “little crop” in Portuguese because it was first planted at a smaller scale as a cover crop for soybeans.
But producers upped the investment in this crop when they notice its good profitability. And because the safrinha is harvested in the Brazilian winter, it is also named winter corn crop. So, now back to the current season, the winter corn crop is already planted, and harvesting should begin around mid-May. So far, crops have reported excellent conditions, which is great news for farmers.
They decided to invest more in growing corn this season because of expectations of rising global prices which follow projections of a global undersupply of corn this season. The USDA expects demand to surpass production by over 25mn t.
The 2024-25 season is expected to be the second largest in Brazil's corn historical series, just a few million tons behind the 2022-23 cycle when weather conditions were ideal and supported a record production. The current crop faces some occasional problems because of the dry weather, especially in Parana and Goias, two of the largest corn producers in the country.
But Mato Grosso state, the largest corn producer in Brazil, has perfect weather conditions with rainfall exceeding expectations for this time of the year.
CF: And what can you tell us, Nathalia, about the outlook for corn exports this year?
NG: The outlook for exports is still very uncertain. We don't know yet if there's going to be an increase compared to last year or decrease, despite the current cycle posting higher production.
Everything depends on how strong domestic demand for corn will be. The national market has been increasing its corn demand in the past years. The corn ethanol and animal feed sectors are both expected to reach record production levels for the second consecutive year and keep growing their corn purchases because of this. So far, demand from these industries is still weaker, but they are expected to accelerate purchases once again in the second half of the year.
In the second half of 2024, our record demand from these industries lifted domestic prices and encouraged producers to advance sales for the 2023-24 crop. Back then, corn importers didn't want to raise their bids to match the domestic prices, which pushed the export market to the sidelines. And market participants expect that a similar scenario should repeat itself this year.
CF: Thank you for joining us, Nathalia. Thank you to our listeners.
Argus Media will be watching for news on the Brazilian soybean and corn markets for sure. And please stay tuned for more podcasts from Brazil. You can find this and other episodes at argusmedia.com.
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