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SOUTHERN BRAZIL FLOOD LOSSES

The soybean market is still taking stock of crop losses that have occurred due to torrential rains and severe flooding that hit Brazil’s southernmost state of Rio Grande do Sul in late April and early May, although the damage appears to now have been factored into the futures market. A record large crop there had been expected to partially offset losses due to dry weather in Brazil’s center-west growing belt. While the state’s soybean harvest was estimated at 76% complete as of May 2, a larger portion of the crop remained in the field in southern and west-central areas. The heaviest rains fell in the central regions of the state, with rainfall totals for the seven days ended May 2 in excess of 20 inches common in locations there.

In the past week, we have seen Rio Grande do Sul soybean losses due to flooding estimated at anywhere from 1.35 to 2.80 MMT, which would be roughly 6%-13% of the most recent production estimate. CONAB, the supply department of Brazil’s agriculture ministry, last month forecast the crop at 21.888 MMT. CONAB is due to release its latest crop estimate on Tuesday, but we are uncertain that estimate will fully reflect the impact of the flooding.

The flooding has also cut into production for other crops and caused livestock losses. Corn crop losses should have been limited. The corn crop, which CONAB forecast at 5.13 MMT in April, was 85% harvested as of May 2. Rio Grande do Sul is Brazil’s largest rice producing state, but farmers have criticized a government plan to import up to 1.0 MMT of rice. Brazilian rice producers group Fedearroz said domestic supplies should be large enough as, despite the flooding, the state is expected to produce 7.2 MMT of rice, which would be above last year’s estimated crop of 6.9 MMT.

Competing meatpackers have joined forces to circumvent problems caused by the heavy flooding, the President of Brazilian meatpacking lobby Sindicarne told Reuters on Tuesday. Jose Ribas said four chicken and hog plants remained halted, while six were gradually resuming operations. BRF, Brazil’s largest meat producer and largest exporter of poultry said on Wednesday that all five of its slaughter plants in Rio Grande do Sul were operational, while one of four feed plants it owns remained offline. Calculating losses due to the flooding remains a work in progress, BRF said.

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