Luiz Carlos Santos Jr.
Associate Director
SA Commodities

As Brazil enters a new planting season, SA Commodities Associate Director Luiz Carlos Santos Jr. provides an in-depth analysis of Brazil’s grain and oilseed landscape. Despite expected record volumes for crops like soybeans and corn, Santos underscores the challenges faced by producers, including fluctuating commodity prices, increased domestic consumption, and growing logistical competition. With a projected 8 million tons of grain and sugar exports from Santos and the Amazon Arc this October alone, Brazil remains a global agricultural powerhouse. The nation’s infrastructure expansion and adjustments in crop profitability continue to shape the future of its agricultural output.

It is extremely important to mention that in Brazil, considering its vast territorial extension, the agricultural crops are cultivated in different periods. The sowing of the first-crop crops occurs between the end of August and December. The second and third-crop crops and the winter crops, which total 25.34 million hectares, with planting from January to June, are generally cultivated in the same area following the harvest of the first-crop crops. Thus, for all cultivated crops, 56 million hectares are used.

For the harvest that is beginning, the first estimate indicates a production volume of 322.47 million tons, 8.3% or 24.62 million tons higher than that obtained in 2023/24. At the beginning of October, the areas are being prepared, and the planting of first-harvest crops is in its initial phase.

CORN

With the onset of the pandemic and the rise in prices of the main commodities, the corn market began to see a very favorable scenario in terms of prices, profitability and liquidity. In this context, there was a significant incentive, especially in Brazil, to increase the area of ​​the crop in the country, with emphasis on the second harvest, which is largely planted in the same area as the first soybean harvest. With the end of the pandemic and the regularization of global production, after years of climate instability in the main producing countries, there was a sharp reduction in corn prices, both in the international and national markets. Therefore, it is worth noting that current and projected prices, despite being higher, do not guarantee an attractive profitability for the producer for the crop, in comparison with the grains that compete for area, which should be reflected in behaviour close to stability (+0.1%) in relation to the corn area in Brazil in the 2024/25 harvest, after a sharp reduction of 5.9% in the crop area in the 2023/24 harvest. Therefore, amid an estimated 3.4% recovery in productivity in the country, Conab estimates a 2024/25 harvest of 119.8 million tons of corn, that is, 3.6% higher than the 2023/24 harvest.

For the projected commercialization for the 2024/25 harvest, a continuation of the growth trend in domestic corn consumption is estimated (+3.3%), based on the projected increase in the production of corn ethanol and meats in Brazil. Regarding the trade balance, amid the projected lower availability of grain and based on time series econometric models, the outlook is that exports will decline and reach a volume of 34.0 million tons. Regarding imports, stable imports of the product of 1.9 million tons are projected. As a result, the estimate is for a slight decrease in the national carryover stock of the grain, which should reflect, together with other national and international variables, in prices close to those estimated by the econometric model between the neutral scenario and the lower limit in 2025, if there is no significant drop among the major global producers in the next harvest.

In accordance with the latest Conab report, the planting of the first corn crop reached 25.9% of the planned area on October 6, a similar pace to the last harvest. So far, sowing has been concentrated in the South Region, where rainfall has allowed the initial development and implementation of the crop in good conditions. In Rio Grande do Sul, the largest producer of the cereal in the first harvest, planting was carried out in 73% of the planned area, higher than the 65% sown in the last harvest. In the Central-West and Southeast, sowing will occur after rainfall returns and normalizes. In the North and Northeast Regions, planting will begin in November and continue until mid-March. The planting of 3,756.1 thousand hectares is estimated, 5.4% less than that recorded in the last harvest. This reduction in area is justified by the current market situation for corn, in which farmers are opting to grow other crops.

SOYBEANS

Projections indicate that Brazil should expand the planted area and soybean production in the 2024/25 harvest, strengthening its position as the world’s largest producer and exporter of soybeans. Even with the downward pressure on domestic prices and profitability challenges, soybeans continue to be a profitable crop with high liquidity. The growing global demand, driven by increased crushing and the expansion of biofuel production, both in Brazil and internationally, fuels expectations of growth in exports and domestic crushing.

There is downward pressure on international prices caused by an estimated supply well above demand and high carryover stocks for the 2024/25 harvest. It is worth noting that, if there are climate problems in the United States, Brazil and Argentina, prices may rise again.

According to CONAB, planting of the 2024/25 soybean crop has begun in some states, but it is behind schedule compared to the last cycle due to unfavourable weather conditions, with irregular rainfall, in volume and spatial distribution, in the Southeast and Midwest. Planting reached, on October 6, 4.2% of the planned area, compared to 10.1% of the area sown in the 2023/24 crop. Paraná is the most advanced state, with 22% of the area sown, while in Mato Grosso, the largest national producer, planting was more restricted to areas with irrigation support and reached 3.7% of the sown area, compared to 19.1% planted in the same period in the 2023/24 crop. São Paulo, Minas Gerais, Goiás and Bahia have also already started sowing the oilseed but restricted to areas irrigated by central pivots. This harvest is expected to cover 47,331.8 thousand hectares of oilseeds, 2.8% more than the last harvest. This increase will occur mainly in degraded pasture areas and in the switch from corn to soybean cultivation due to its current higher profitability. The estimated production is 166,053.9 thousand tons, 12.7% higher than the 2023/24 harvest. These initial figures indicate the possibility of a new record in this harvest that is beginning.

China continues to be the largest importer, with 109 million tons in the 2024/25 harvest or 61.49% of the total imported in the 2024/25 harvest.

The scenario for 2025 is of record production, with supply greater than demand and high world stocks.With the surplus in world production and high carryover stocks in the United States and worldwide, international prices are expected to continue falling. This trend is expected to negatively impact domestic market parity prices, resulting in tighter profitability margins in 2025. Despite the forecast of a drop in domestic prices, soybeans remain a profitable crop. This profitability scenario supports the expectation of an increase in the planted area for the 2024/25 harvest, with a projected growth of 2.98%. With this expansion, total soybean production is expected to rise from 147.4 million tons to 166.3 million tons. The increase in global demand for soybeans, combined with the growth in Brazilian production, suggests a significant increase in Brazilian exports. In 2025, Brazilian exports are estimated to reach 104.8 million tons, representing an increase of 13.33% compared to the previous year. In addition, with the expected increase in the percentage of biodiesel added to diesel and the growing demand for vegetable protein, an increase in the volume of soybean crushing is projected. This volume is expected to reach 56.72 million tons in 2025, reflecting growth of 7.9% compared to the previous year.

WHEAT

In September 2024, with the scarce domestic supply of wheat from the new harvest, with the damage caused by adverse weather conditions in Paraná, the domestic market showed increases in value, since in Paraná, the monthly average was quoted at R$ 78.94 per 60-kilo bag, showing a monthly increase of 3.76%. In Rio Grande do Sul, the monthly average was R$ 69.21 per 60-kilo bag, with an increase of 0.02%. In the international market, adverse weather conditions in important global producing regions such as Russia, Europe, the United States, Australia and Argentina and the completion of the harvest in the Northern Hemisphere acted as factors in the increase in value of 6.18% of prices, with a monthly average of US$ 268.21 per ton. In September 2024, Brazil imported 592.1 thousand tons of wheat. Conab revised the figures for productivity and production for the 2024/25 harvest. The estimate is that 8,263.7 thousand tons will be harvested (+2.1%), with productivity of 2,693 kg/ha (+15.5%). With the reduction in domestic supply, the estimate is to end the harvest with final stocks of 877.1 thousand tons.

LOGISTICS COMPETITION

We are the fifth largest country in the world, with a diverse geography and challenging terrain. Highways, railways and ports, which require significant improvements. Many regions lack adequate transport networks, with limited connectivity and higher transport costs. Poor road conditions, congestion and low port capacity can lead to delays and inefficiencies.

As I have mentioned many times, port terminals that ship sugar also raise grains, and due to the flow of grain and sugar exports, there is an overlap of both products which can impact not only the loading operation on ships but also the unloading at terminals.

The main corn producing region in Brazil is the state of Mato Grosso (MT), with 31% of production, followed by Paraná (PR) with 13%. However, despite the distance of 2,000 km between MT and Santos, more than 30% of corn is exported through this port. The same applies to soybeans, with MT producing 33% of total soybeans, followed by Goiás (GO) with 14%, and more than 30% exported via Santos. Most soybean exports occur between March and June (70%), while most corn exports occur between July and November (75%). This coincides with the sugar harvest period of central and southern Brazil.

The Santos terminals receive sugar and grains by train and truck. Competition, then, impacts road freight and the allocation of wagons between sugar and grains. In recent years, we have seen an increase in grain transportation by train to Santos, with sugar’s share falling from 30% to 25% last year. A reduction in wagons utilized for sugar can delay the flow from the interior to the port terminals, forcing the search for alternatives such as trucks and resulting in an increase in road freight.

EXPANDING THE PORTS OF THE NORTHERN ARC

The sector has also been very significant in the dry bulk exports, mainly corn and soybeans. “Today, we have an installed capacity of 52 million tons and there are already investments underway for another 48 million tons of bulk. In other words, we will have a shipping capacity of around 100 million tons of grains in the next five years.” In the first quarter of the year alone, according to a report by the National Supply Company (CONAB), of the total corn exports in the country during the period, 43.3% left through the ports of the Amazon Arc.

EXPORTING FIGURES

According to the latest report by SA Commodities Agro issued on October 28th, Brazil had reached the following levels in exports of Sugar, Soybeans and Corn: 

 25.9 million tons of sugar between January 1st and October 28th, more than 5 million comparing the previous year.

 Comparing the same period, we have soybean exports totalling 95.0 million tons compared to 99.6 million tons in the same period in 2023. Corn also shows a drop with 22.4 million tons in 2024 compared to 32.6 million tons in 2023.

 Brazil’s soybean exports are expected to return to the 100 million tonnes mark in 2025, with the projected expansion in oilseed production. According to the National Supply Company (Conab), foreign soybean sales will increase by 13.3% and reach 104.7 million tonnes next year. In 2024, a drop of 9.2% is expected, to 92.4 million tonnes.

LINE-UP TODAY

Our Brazilian sugar line-up showing a huge volume with already 363.697 mt of cargo loading, 1.4 mln mt. waiting to be loaded and another 461.499 mt. expected to arrive. For the maize line-up, volume is even higher with 544.454 mt of cargo loading, 749.086 mt. waiting to be loaded and another 1.1mln mt. expected to arrive. Finally, soya complex showing 496.922 mt of cargo loading, 1.6 mln mt. waiting to be loaded and another 1.2 mln mt. expected to arrive. In other words, considering October exports we can account for 2.2 mln mt. of sugar, 2.4 mln mt. of maize and 3.5 mln mt. of soya. To summarize, we can say that in October Brazil shall export be around 8mln tons of softs.

WEATHER AND CLIMATE CHANGES

The climate issue is one of the four forces that directly impact the commodities market, and this year it had a significant impact with the fires in Brazil, especially in the centre-west of the country.

The state of Mato Grosso, known as one of the most important in the production of soybeans and corn, was one of the states that suffered the most from the fires in 2024. With 24.8 thousand fire outbreaks, Mato Grosso is the state in Brazil that has burned the most since January of this year, according to data from the BDQueimadas Program, from the National Institute for Space Research (INPE). Only in August, more than 13.6 thousand outbreaks were recorded, surpassing the numbers combined from January to July of this year.

Burning reduces the amount of nutrients in the soil, and the result is negative for crops in the medium term, as organic components such as humic acids and fulvic acids are reduced. Over the years, the soil becomes increasingly susceptible to erosion, harming agricultural production.

Weather and climate imbalances further increase the challenges of food insecurity. According to the WMO report, the number of people suffering from acute food insecurity has more than doubled in less than five years worldwide, jumping from 149 million people before the Covid-19 pandemic to 333 million people in 2023, and this is considering only data from 78 countries monitored by the World Food Programme.

Despite the climate challenges faced by Brazil, with severe drought and fires in several regions of the country, the National Supply Company (Conab) estimates that the next 2024/25 grain harvest, which has already begun to be planted, has the potential to surpass the previous season. It is risky to say that we have the potential for a new record in the historical series.