🌾 Soybeans galore

Good morning! This week, we discuss new estimates of Brazil’s soybean planting area, the Sergio Moro trial, and the state of Brazil’s carbon credits market. 

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Brazil’s soybean planting area larger than expected

Brazil’s soybean planting area is 1.2 million hectares larger than projected by the National Supply Company (Conab), according to a new estimate by Agroconsult. The consultancy arrived at this figure by using a new method, satellite imagery, to make its projections more accurate. A proprietary algorithm interprets these images. It also uses the database of Serasa Experian, a credit protection agency.

By the numbers. Agroconsult’s production estimates for the 2023-2024 harvest exceed Conab’s official figures by almost 10 tons — 156.5 million tons versus 146.9 million. Looking back at the 2022-2023 harvest, we see a similar gap: 162.4 million tons from Agroconsult, against Conab’s 154.6 million.

• The Agroconsult figures would mean that Brazil’s recent harvest records were even more impressive than originally thought.

• Agroconsult also revised productivity figures for several states. Minas Gerais produced 63.4 bags per hectare, it said (instead of 57). In Mato Grosso, the jump was from 52.5 to 53.1 bags per hectare. In Bahia, from 60 to 63.8.

Benchmark. Agroconsult’s figures are much closer to those of the U.S. Department of Agriculture, which is considered the industry standard.

 Why it matters. Experts say the recent behavior of soybean prices suggests the market had more soybeans available than thought. Such a discrepancy in data leads buyers and sellers to behave differently and could lead to strategic errors. 

Warning signs. Agroconsult’s latest report on soybean production suggests that productivity in major production hubs will fall sharply, a byproduct of extreme weather.

Thought bubble. As we explained last July, economists at the Brazilian Institute of Economics at think tank Fundação Getulio Vargas project that soybean production alone would account for 20 percent of Brazil’s gross domestic product growth in 2023, taking its indirect chain into account. 

Sergio Moro on his way out of the Senate?

The top electoral court in the southern state of Paraná today begins a trial that could unseat Senator Sergio Moro, who is accused of abusive campaign strategies during the 2022 elections. A verdict is expected next week. 

Common denominator. Few people expect Mr. Moro to escape the ultimate punishment, given that all sides of the aisle despise him with similar intensity. His trial was motivated by complaints filed by Jair Bolsonaro’s far-right Liberal Party and a leftist coalition led by President Luiz Inácio Lula da Silva’s Workers’ Party.

• The two forces agree on virtually nothing, but both want Mr. Moro out of Congress.

Journey. It is impossible to understand the charges against Mr. Moro without looking back at his political fall from grace. Every step of the former judge-turned-cabinet member-turned-politician seems to have been the wrong one.

Bench. Mr. Moro rose to prominence as the federal judge overseeing the Operation Car Wash investigations. On several occasions, his moves were denounced as anti-left partisanship, most notably when he unsealed high-profile testimony seen as damaging to the left days before the 2018 election. 

• That perception was only reinforced when he agreed to become Jair Bolsonaro’s justice minister days after the far-right leader won the race.

Pivot. In 2020, Mr. Moro burned bridges with Mr. Bolsonaro’s supporters by resigning from the cabinet and accusing the president of trying to tamper with Federal Police investigations. 

• His next move was equally perplexing: he joined a consulting firm that served the same companies he had accused of corruption while still a judge. 

• In late 2021, Mr. Moro hinted at a presidential run. But his days as an anti-corruption zealot made him unpopular with politicians, and his party at the time was unwilling to spend big bucks on his bid. He switched parties and was once again denied a presidential bid — running for the Senate instead.

Accusations. Mr. Moro is accused of abuse of economic power because he spent far more than any of his opponents in the senatorial race, due to his previous presidential aspirations. Electoral prosecutors recommended his impeachment in December.

 Why it matters. If Mr. Moro is indeed impeached — and if the decision is upheld by the Superior Electoral Court — a by-election will take place for a Senate seat representing Paraná state. Parties on the left and right are already moving to position themselves.

Possible bids. The press has reported that Congresswoman Rosângela Moro (Mr. Moro’s wife) could run to replace him. And she could face former First Lady Michelle Bolsonaro, tipped by allies of the former president to run for the seat, and Congresswoman Gleisi Hoffmann, the Workers’ Party chair and a former senator.

Markets

The Central Bank released its latest inflation report just before the Easter holiday. It points to a conundrum: while Brazil’s revenues are accelerating, spending is rising at a faster pace, largely due to increased social programs. The bank mentions that markets don’t expect the country’s public debt to stabilize this decade.

Chart of the week: Carbon market projects

There is no shortage of estimates of Brazil’s multi-billion dollar potential to be a major player in the carbon market. The nonprofit Idesam recently launched an interactive panel that, for the first time, brings together in one place all publicly available information on initiatives that generate (or intend to generate) forest carbon in Brazil. 

By the numbers. There are 139 projects in the country — 33 of which have already issued carbon credits; 99 percent are in the Amazon — and 95 percent are on private land.

Stories we’re following

Several cabinet ministries are approving projects in areas controlled by allies ahead of municipal elections in October. We have shown how pork-barreling can distort local politics.

Lending tied to consumption is accelerating, according to data from PicPay, Latin America’s largest digital wallet. That could mean higher GDP numbers. 

President Lula will travel to several Brazilian states this week to inaugurate public works projects, a strategy designed to draw voters’ attention to the government’s achievements amid a decline in popularity.

EBC, the federal public television network, will include more evangelicals in its daily programming. The move is part of Lula’s strategy to get closer to a constituency that has massively supported Jair Bolsonaro.

In case you missed it

French President Emmanuel Macron toured Brazil last week. Despite their camaraderie, captured in now-viral photos, Mr. Macron and Lula diverged on the war in Ukraine, the Mercosur-EU trade deal, and nuclear submarine cooperation.

Yesterday marked the 60th anniversary of Brazil’s 1964 military coup, which ushered in a 21-year dictatorship. The government held no official event to commemorate the event, but at least eight of the 38 cabinet ministers spoke about it. Listen to our podcast about the dictatorship.

In the rolling quarter ending in February, Brazil’s unemployment rate rose slightly to 7.8 percent, up 0.3 percent from the previous rolling quarter ending in November. Meanwhile, the number of people in employment remained stable at 100.2 million.

 Brazil’s birth rate fell for the fourth consecutive year to its lowest level since 1977. The long-term economic implications of a shrinking future workforce could be dire.

President Lula signed an ordinance outlining the requirements for companies to join a program to encourage automakers to produce safer and less polluting cars — and apply for financial credits.

 Dark Storm Team, a hacker group, issued a threat to attack Brazilian infrastructure.

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