Conab sounded an upbeat note on corn and soybean prices as it forecast Brazil’s sowings of the crops hitting record highs, despite raised costs of the likes of fertilizers and sprays.

The official Brazilian crop bureau, in its first forecasts for 2022-23, pegged the country’s corn area at 22.13m hectares, up by 542,000 hectares year on year to a fresh record high.

The increase in plantings – reflecting expectations of an expansion in sowings of safrinha corn, as seeded early in the calendar year – comes despite growth in input costs which have soared worldwide, thanks to raised energy prices, logistical squeezes and knock-on effects of the Ukraine war.

In Mato Grosso, corn production costs as of June were running 25% higher year on year, according to Imea, research institute for the state, which is Brazil’s top corn and soybean producer.

“This increase is mainly due to higher prices for KCl [potash], MAP [phosphate] and urea, which increased by 53.6%, 28.9% and 28.7%, respectively, in the same period,” Imea said.

‘Still tight’

However, Conab, while acknowledging “high production costs”, forecast corn prices remaining elevated too.

“The market outlook does not show a significant downward trend for corn prices, since it points to demand and supply still tight for next year,” said Sergio De Zen, Conab’s director of agricultural information and agricultural policies.

“As a result, margins for producers remain positive.”

The bureau forecast Brazil’s total corn production in 2022-23 expanding by 10.81m tonnes year on year to a record 125.5m tonnes, including a 94.5m-tonne safrinha crop.

Nonetheless, Brazil’s corn inventories at the close of the season were seen growing by less than 750,000 tonnes over the season, to 10.50m tonnes, with exports expanding by 7.0m tonnes to swallow up most of the extra output.

‘Should remain attractive’

For soybeans, for which the 2022-23 planting campaign starts next month, Conab forecast plantings up by 1.45m hectares at 42.40m hectares, an all-time high.

Production was forecast swelling by 26.32m tonnes to top 150m tonnes for the first time,

Again, the bureau flagged the comfort to farmers of prices which “should remain attractive, as world supply and demand for the oilseed remains tight”, although the harvest would go a greater distance in replenishing Brazil’s soybean inventories.

Indeed, stocks will end the season up 3.92m tonnes at 9.90m tonnes, despite a 16.72m-tonne jump in exports, to nearly 92m tonnes.

Margins fall

Farmers’ profits in growing soybeans look like declining nonetheless for 2022-23, despite high prices, according to Imea’s analysis, which showed costs for growers soaring by 54% from 2021-22 levels.

“With the increase in expenses, the breakeven point for the harvest was increased by 56% compared to last year, estimated at R$106.99 per sack,” the institute said.

Despite elevated prices, estimated at R$161.36 per sack in Mato Grosso, beating breakeven, Imea reported a drop of 42% in soybean production margins.

The institute also noted that, despite the imminence of the opening of the soybean planting window, some producers reportedly “still do not have all the inputs purchased on their farm, which can be a point of attention” at the start of the seeding season.