February 22, 2006

Reduction in Brazilian soy yield follows disappointing year

Although bad weather and late planting will bring another bad year to soy farmers in Brazil this year, overall yield reduction will not exceed 5 percent from the expected national production of 57 to 60 million tonnes, according to EMBRAPA, the Brazilian equivalent of the USDA.

Am¨¦lio Dall'Agnol, EMBRAPA's national coordinator, said the Brazilian crop is growing satisfactorily, with the exception of some states.

Dall'Agnol pointed out that yield reduction was high in varieties planted very early in the season, but it should not reduce production by more than 5 percent with a greater reduction on corn than soybeans. Crops are at various stages of growth across the country due to varying planting periods.

Asian soybean rust is causing more input costs for farmers, but little damage to crop, Dall'Agnol said. The disease did not reduce yields much, but it increased cost of production. Farmers are now well informed on how to manage the disease due to extensive awareness campaigns, Dall'Agnol added.

However, Brazilian soybean growers have had a disappointing year in 2005. Planted area fell by 7 percent, after six consecutive years of strong growth. Many growers had incurred losses due to lower revenues.

Revenues from the domestic market fell 28 percent on year as severe crop losses  in South America came on top of a full crop in the United States and a strong dollar.

Profits also fell due to a rise of 20 percent in production costs influenced by high exchange rates, high prices of raw materials and smaller yields in the 2004/05 crop.