Amidst evolving numbers and dynamic trends, Brazil’s position remains steadfast in the world grain market. Its exports continue to surge, reflecting not only the nation’s agricultural might but also its commitment to nourishing the world in an era of growing demand and intricate global interdependencies. In this article, we delve into the recent developments, challenges, and triumphs within Brazil’s grain production industry.
Luiz Carlos Santos Jr.
Associate Director
SA Commodities
At the end of 2022, we were estimating a delivery of up to forty-two million tons of grains for the 2022/23 harvest. We are at the end of August 2023, and according to the latest survey, the numbers points to a volume of 320.1 million tons, growth of 17.5% or 47.6 million tons above the 2021/22 harvest.
The cultivated area, estimated at 78.3 million hectares, is 5% or 3.8 million hectares greater than the area sown in 2021/22. The biggest increases are observed in soybeans, with 2.58 million hectares or 6.2%, in corn, 615.4 thousand hectares or 2.9% and, in wheat, 345.2 thousand hectares or 11.2%.
CORN
The absence or reduction of rainfall in a great part of the country allowed a great advance in the harvested area, which has already reached 54.7% of the sowed area. This percentage of harvest is still well below that of the past harvest, where, in the same period, 71.7% of the areas sown with the grass had already been harvested. This delay was already expected due to the delay in soybean sowing in different regions and, consequently, its harvest, and by the decrease in temperatures during grain maturation, which delayed their natural loss of moisture.
In addition, the fall in the price of the cereal made many producers opted for the natural reduction of moisture in the grains as a way of decrease in production costs. Even so, the scenario continues extremely positive for cereal production, which had its production increased again, with 100.1 million tons expected to be taken from fields sown with maize. This production is 16.6% higher to that obtained in the 2021/22 harvest, former production record, obtained in the cultivation of 17.1 million hectares, with an average productivity of 5,856 kg/ha.
Export data from Secex, the Brazilian Foreign Trade Secretariat, says that the third week of August showed that the country exported 5.2 million tons of corn, or 373,204 mt/d, up 15% from the same period a year ago. The Brazilian second corn crop harvest reached 77% of the planted area as of August 17, still behind the 89% harvested at the same time in 2022. Harvesting ended in Mato Grosso and was advancing in the last reas of Goias. In other states, high grains moisture delayed harvesting.
SOYA
The 2022/23 soybean harvest reached 154.6 million tons, 1.48% higher than first crop estimate made by Conab, in October 2022, and 10.9% higher than the old production record, reached in the 2020/21 harvest. Those results happened due to the excellent climatic conditions occurred in most producing regions, except for Rio Grande do Sul, and the high technology used by producers.
Productivity records were achieved in several states, with highlight for Mato Grosso, the largest national producer, and Bahia, which equalled the productivity record for the 2020/21 harvest. 44.0 million hectares were cultivated, which reached an average productivity of 3,508 kg/ha.
LOGISTICS
Brazil is a country recognized worldwide as a reference in the production and export of food, a sector that represents about 7.9% of the Brazilian GDP and remains one of the most important economic pillars in the country.
Today Brazil has an agribusiness with supported by high technology and research, but the others involved are not always able to keep up with the best use of these crops and productions.
The simultaneous increase in the production of soy, corn and sugar this year in the country should generate a logistical bottleneck in the flow of mentioned products. This logistical bottleneck continues to be an issue when the shipping period for soy and sugar meet and dispute terminals in Brazilian ports, the port of Santos is one of them.
The port terminals that export sugar also elevate grain, and due to the flow of exports of these commodities, there is an overlap of both products that can impact not only the loading operation on vessels but also the unloading at the terminals.
LOGISTICS X TECHNOLOGY
It is known that Brazil will harvest more grains in the 2022/23 summer harvest than its total storage capacity, with a jump in soybean production leading the country to register a situation that has not happened in the last 20 years.
We must admit the progress that Brazil has been conquering in terms of logistics, ports, and railroads in recent years, but the crop is growing, as is demand. We are responsible for global supply in agribusiness, and we need to ensure that logistics walk alongside or at least closely match the technological advances we have in relation to the production, research, and development of these commodities.
GRAINS TAKE THE LEAD
In the competition between sugar and grains, the latter must have greater power to guarantee space on railroads and port terminals due to the volume handled and to be able to pay more compared to the sugar market, which has been suffering from having to manage its offers at a time when that world stocks are low, and the world needs more and more Brazilian sugar.
VOLUME EXPORTED THROUGH THE PORTS
Let´s have a look what is going on in practice and how the shipments are been performed through the ports in Brazil. (Graph 1)
The year is 2023, week 33 and our line-up still booming with nothing less than 259 vessels to load almost 16.0 million tons between soya and maize. Same period last week, we had 125 vessels to load 7 million tons. Please see the chart below.
Looking the whole picture including soya complex, maize, sugar, and wheat, we can easily see the growing numbers and what we shall have till the end of the year. For the soya complex, we have 82.0 million tons exported so far against 70.2 million tons same period last year. Corn exports almost the same with only 200.000 tons difference and sugar showing an increase of 822.000 tons from same period last year.
From now on, is much expected to see soya shipments slowing down while corn will start picking up, in dispute with raw sugar exports.
WAITING TIME
When we talk about long and busy line-ups, we immediately think about waiting time, two little words that when put together can haunt not just the traders but the execution team, normally responsible for operations in general.
Graph 2 and 3 refer to the ports of Santos and Paranagua and can give you an idea of how scary this can be.
About SA Commodities and Unimar Group
For over 27 years, SA Commodities and Unimar Group have been leading the way in the commodities, shipping, and research industries. And now, we are proud to announce our longstanding partnership that has spanned over 15 successful years.
SA Commodities is renowned for its expertise in the commodities market, delivering top-notch solutions to clients worldwide. Our extensive knowledge and experience ensure that we provide the best trading options, tailored to meet the unique needs of each customer.
Unimar Group, on the other hand, has established itself as a prominent player in the shipping industry. With own offices strategically located all over the Brazilian coast, offering unrivalled logistic solutions, and covering services as shipping agency for tramp, liner, offshore and dredging boat, that guarantee the safe and effective every single call attended by our group.
About the author
The author Luiz Carlos is Associate Director at SA Commodities, he started his career in early 90s developing services based on commercial support, strategic consultancy and projects for shipping agencies willing to attend sugar and grain vessels across various Brazilian ports. In 2009 when he joined in partnership with the Unimar Group to handle the commercial division for softs.