Commodities Shuttle: High prices and lack of inputs affect grain supply in the 2022/23 harvest

With the exception of sugar, all agricultural commodities closed on a high this Tuesday (9). It was the day for the release of data on the supply and demand of grains referring to the United States and other large producers, and the result surprised the market.

The USDA (United States Department of Agriculture) contradicted industry expectations and pointed to a drop in the US soybean crop in 2021/22. The new numbers indicate 120.4 million tonnes, 1% less than expected in October.

As a result, the January soybean contract, traded in Chicago, closed at US$ 12.41 per bushel (27.2 kg), 2% above the value of Monday (8). Even with this high, current prices are still far from those of June, when negotiations were made at US$ 14.79 for the same contract.

The FAO (United Nations Agriculture Organization) warns of the current level of commodities, which reach average prices close to the record of a decade ago.

The concern, however, should be with the 2022/23 harvest. The global disarray in the supply of inputs and high prices could change the direction of production in the next year.

Brazil is still planting the 2021/22 crop, and is not feeling so much the effects of this adverse scenario of inputs because it anticipated purchases.

The same does not happen with the North Americans, who, in view of the new costs, will have to reduce the corn area and expand the soybean area. The corn crop has a higher cost than soybean.

Reduced supply and rising input prices do not have a quick solution, and should also affect Brazilian corn producers in the off-season, according to Daniele Siqueira, an analyst at AgRural.

If costs remain high, they should rethink corn planting, which follows soybeans in Brazil.

China, once again, will be the tip of the balance. The USDA announced this Tuesday that Chinese soybean imports should reach 100 million tonnes in 2022/23, a volume lower than previously forecast.

Brazil, the United States and Argentina, the three main world producers, will have better harvests in 2021/22. The two South American countries, however, still depend on climate evolution.

If all goes well, world soy production in 2021/22 will rise to 384 million tons, and corn to 1.2 billion tons.

High economic costs and difficulties in obtaining inputs may not guarantee, however, such significant volumes in 2022/23, generating new pressure on prices.

A smaller food supply would be even more complicated to control inflation, which has been rising. In FAO numbers, demand is heated. In this harvest, while world grain production is 2.79 billion tonnes, consumption will reach 2.81 billion.

The chicken will… After a good October, when totaled 397 thousand tons, total exports of chicken meat reached 3.86 million tons in the year. The increase was 10%, compared to the 2020 volume.

…and brings recipes The financial result, due to the improvement in international prices, evolved 25% in the period, reaching US$ 6.34 billion from January to October, according to the ABPA (Brazilian Association of Animal Protein).

China effect Beef exports from Mato Grosso dropped to US$ 111 million last month, 56% less than the US$ 253 million in September, according to the Imac (Instituto Mato-Grossense da Carne).

Less rice … After a very heated 2020, husk base rice exports dropped to 958,000 tonnes from January to October this year. In the same period last year, there were 1.69 million.

​…in exports Revenues totaled US$ 307 million in the first ten months, down from US$ 466 million in the same period in 2020, according to Abiarroz (Brazilian Association of Rice Industries).