Brazil lowers its 2022 crop forecast, but remains at record level -IBGE

RIO DE JANEIRO, BRAZIL – Brazil, one of the world’s largest food producers, has lowered its forecast for the 2022 grain harvest by 3.8% to 261.6 million tons, a figure that would still set a new record for the country, the government said Thursday.

The decline recorded in February compared to January is mainly due to “climatic problems” related to the lack of rainfall in the southern states, according to the Brazilian Institute of Geography and Statistics (IBGE).

However, if this estimate comes to pass, it would still be 3.3% higher than the 2021 crop, which saw 253.2 million tons harvested in a year when the Brazilian countryside was also affected by various meteorological adversities.

According to official estimates, rice, corn, and soybeans account for 92.7% of production potential and 87.7% of cultivated area. Production of soybeans, the country’s main commodity, is expected to decline by about 9% year on year.

“The negative impact caused by the drought has drastically affected the performance of summer crops in the central and southern states of the country,” IBGE manager Carlos Barradas is quoted as saying in a press release.

Brazil’s statistics office also forecasts a nearly 8% decline in rice production compared to 2021 but expects a 24% increase in corn production.

The agricultural sector, one of the driving forces of Brazil, Latin America’s largest economy, declined by 0.2% in 2021 compared to 2020 due to unfavorable weather conditions in the country’s main producing states.

The weak performance of Brazil’s rural sector contrasted with the progress made by industries such as services (4.7%) and industry (4.5%), which played a crucial role in helping the Brazilian economy grow by 4.6% in 2021, recovering from the 3.9% decline in 2020, the first year of the coronavirus pandemic.

For this year, however, the financial market expects a sharp slowdown in Brazilian economic growth, which is expected to be only 0.4%, due to galloping inflation, rising interest rates, and uncertainty stemming from the presidential election in October and the war in Ukraine.