January 28, 2005

Brazil expects record soy, grain harvest this year

Brazil, the world's second-largest soybean producer, expects a record soy harvest this year, adding to the glut when soy prices fell 40 percent in the past eight months, the government's statistics agency said.

A survey done in early December, estimates that Brazil's 2004-2005 soybean crop may rise 29 percent to 63.4 million metric tons from 49.2 million metric tons in the previous crop, the agency said on its website.

Future soy production may be scaled back, because with lower prices growers have had to spend about 20 percent more on pesticides to fight the Asian rust plague, said Carlos Alberto Lauria, the agency's crop analyst. Soy futures fell 1.34 percent in Chicago at 12:27 p.m. New York time.

"Growers insist on soybeans because they have no better choice,'' Lauria said. "Prices for corn and cotton are also low.''

Corn is down 30 percent in the eight months.

"When I decided to plant soy, prices were still high,'' said Alecio Marostica, a farmer who has 600 hectares of soy, corn and beans in Goias state. "If prices keep falling, I'm certainly going to reduce soybeans and plant eucalyptus or something else instead.''

Grain output, including soybeans, wheat, corn and rice, may rise about 13 percent to a record 134.9 million tons on favorable weather conditions, the agency said. The survey didn't reflect the lack of rain starting in January in the Southern Rio Grande do Sul state, Lauria said.