Brazilian agro to see record harvests but higher costs in 2022

With just over two weeks to go until the end of 2021, the market has begun posting its forecasts for Brazilian agriculture, and so far the consensus is that 2022 will be a year of mixed results. On the one hand, it should see some record harvests thanks to more favorable weather conditions. On the other, production costs are expected to be even higher, which could end up shrinking producers’ margins.

This year, the weather turned out to be the main reason for uncertainty. The drought in the country, the worst in 91 years, may not have significantly impacted one of the main crops in the country – soybean – but it did delay its sowing, which in turn ended up harming the corn production cycle.

The water crisis, along with last winter’s frosts, also damaged coffee production. The crop’s biennial nature means expectations for yields were already lower for 2021 than for the previous year. 

In 2022, weather should continue to negatively impact agriculture, though to a lesser degree, especially for grains. Above-average rainfall registered since October, mainly in the Center-South region, allowed soybean to be sowed at the right time and thus corn too. The 2021/2022 harvest is set to beat records. 

According to the National Supply Company (Conab), grain production next year should reach 289 million tons. If accurate, this would represent a 14-percent bump compared to this year’s harvests. Looking in more detail at the forecast, soybean will account for 142.01 million tons of the total, representing a...