Local farm consultancy Agroconsult Tuesday lowered its forecast for the 2013-14 Brazilian soybean crop to 86.9 million metric tons from 88.6 mmt.
The latest forecast is in line with other local private forecasts released in the last few days, which put the crop at between 85 mmt and 87 mmt.
"Dry weather in the south, particularly in Parana, and rain during the harvest in Mato Grosso have frustrated expectations," Andre Pessoa, director of Agroconsult, told a press conference in Sao Paulo.
Agroconsult has just completed its annual Rally da Safra crop tour, which traveled through all the main soybean producing regions over the last two months.
A grand variation in the crop conditions, not just between regions but also between properties, has made it extremely difficult to forecast the crop this year, Pessoa noted.
Brazil was on course to produce a crop in excess of 90 mmt until drought struck across the south.
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The biggest impact was in the north and northeast of Parana, the No. 2 soy state, where a dry January and February sharply reduced production, resulting in output falling to 14.8 mmt in the state compared with 15.9 mmt last year.
Similar problems were encountered in Mato Grosso do Sul, Sao Paulo and Goias states.
However, drought only moderately affected soybeans in the southernmost state of Rio Grande do Sul, the No. 3 producing state, where production will be 13.3 mmt, almost the same as last year despite an increase in area, said Agroconsult, putting it at odds with the Agriculture Ministry that said losses have been significant.
In contrast, it was excessive rain in Mato Grosso, the No. 1 soy state, which caused the damage in February, promoting disease and damaging the beans. As a result, production in the state will total 27.1 mmt, up from 23.5 mmt last year but down from expectations that neared 30 mmt.
One of the defining characteristics of this year's harvest, which is around 75% complete, is high caterpillar populations across the entire soybean belt. But the villain is not the much-feared Helicoverpa armigera, rather the falsa-medideira, or looper, caterpillar.
As a result, farmers have been forced to increase insecticide applications, totaling an average of six this season compared with four just two years before.
Fungicide applications have also increased from an average of 2.5 applications two years ago to 3.0 this year.
Not only are soybean farmers applying more chemicals but they are having to resort to more expensive options because of the reduced efficiency of traditional products.
Chemical costs have risen 53% this year, leading a rise of 12% in total soybean production costs this year.
According to Agroconsult, the cost of planting an acre of soybeans rose to R$1,511 per hectare ($267 per acre), up from R$1,344 last year.
Interestingly, Agroconsult detected a decline in the use of genetically-engineered beans from 88% in 2012-13 to 86% in 2013-14.
According to Pessoa, farmers are using conventional beans to rid themselves of weeds that have developed resistance to glyphosate and also because there is a premium that reaches R$7 per 60-kilogram bag ($1.34 per bushel) for non-GMOs.
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