JPM-Rumo Mato Grosso Harvest Tracker(Jul. 14)-20250714

The Mato Grosso Agribusiness Institute (IMEA) has published its weekly update onthe soybean and corn harvest. We remain OW on RAIL3, trading at 5.7x EV/EBITDA12M Fwd.

•Corn. Corn production for the 2024/25 season in Mato Grosso is at 54 milliontons (+13% y/y). The commercialization rate for the 2024/25 season reached51% in June, up 3.4 p.p. m/m, while for the 2025/26 harvest it is at 7%, +1.5p.p. m/m. USDA projects a 0.7% increase in corn supply to 1.7 billion tons forthe 2025/26 harvest, driven by production gains in the US, Ukraine, andArgentina, with demand rising 1.7% to 1.5 billion tons due to higher exportlevels. As a result, final inventory levels are expected at 272 million tons, down4.3% y/y.

•Soybean. Soybean production for 2024/25 is at 50.9 million tons (+30% y/y)while expectations for the 2025/26 crop is at 47.2 million tons (-7% y/y). Asof June, the commercialization of the 2024/25 crop reached 82%, +5.9 p.p. m/m, driven by a reduction in inventory levels as the corn harvest accelerates,coupled with an increase in grain prices by 1.4% m/m. As for the 2025/26season, commercialization reached 17.5%, +3.3 p.p. m/m, and 2.7 p.p. belowlast year. In June soybean crushing reached a new record at 1.1 million tons, butdecelerated 8.4% m/m due to scheduled maintenance shut downs. YTDsoybean crushing volumes amounted to 6.7 million tons, up 2.3% y/y.

•J.P. Morgan’s view on Rumo (RAIL3, OW). We believe the marketcontinues to price in concerns on a potential weaker volume outlook andskepticism on the company’s ability to achieve its full-year guidance. Thestock is trading at 5.7x EV/EBITDA 12M Fwd, which is a c.35% discount tohistorical levels and, in our view, presents a favorable risk/reward asymmetry.Nevertheless, delayed grain commercialization, despite improving harvestforecasts, constrains the potential for earnings revisions and a valuation re-rating in the near-term.