January 7, 2008

World to focus attention on Brazil and Argentina as grain prices surge

Brazil's vast production and Argentina's huge potential for expansion of crop acreage are drawing foreign interest and investments according to local business daily Valor Economico on Friday ( Jan 4, 2008).

As cattle grazing is being scaled back in Argentina, more cropland is being freed up for grains, the business daily reported

Crop areas in Brazil increased by 83.5 percent between 1996 to 2006, while pasture land declined by 3 percent in the same period, the Valor Economico reported, citing preliminary results from the Brazilian Census Bureau (IBGE) in December 2007.

Both Brazil and Argentina  produced significant amounts of soy and corn last year and have focused land use on grain yields.

Argentinean farmers are scaling back on ranching to concentrate on grain production due to poor beef prices. Brazil currently has another 90 million hectares of pasture that might be transformed into crop land over the long term.

Brazil holds the most potential for land acquisition, bigger than US and Argentina, Liiz Otavio Campos, a Credit Suisse agribusiness consultant, said.

The two countries is expected to account for half of global soy exports and a quarter of the world's corn trade for the 2007-08 crop year.

Brazil is expected to produce 62 million tonnes of soy while Argentina is projected to contribute 47 million tonnes.

Brazilian corn production is expected to hit 50 million tonnes while Argentina would produce 22.5 million tonnes.