April 7, 2004

Brazil Soy Crop Seen At 50-51 Million Tons

Brazil's 2003-04 soybean crop will be even smaller than the latest local estimates at 50 million to 51 million metric tons as dry weather and Asian rust continues to attack the half- harvested crop, according to Andre Pessoa, soy analyst for the local Agroconsult consultants said Tuesday.
 
Agroconsult recently forecast the latest crop at 52.1 million tons, up just 1% on last year, a figure close to a number of other local analyst estimates.
 
"There are clearly more losses in Goias and Mato Grosso because of rust and in the south because of drought," Pessoa told an agriculture seminar in Sao Paulo.
 
He noted that losses to Asian rust, which attacks leaves and saps yields, will only be accurately measured once the harvest has been completed but said they are expected to be substantial.
 
Meanwhile, trips to the states of Rio Grande do Sul and Mato Grosso do Sul confirmed very low yields due to a lack of moisture.
 
Pessoa forecasts the expansion of Brazil's soybean planted area will slow next year, despite record prices, as the losses will reduce some farmers' capital while others will be scared off by rising costs.
 
He sees soybean area rising by just 1 million hectares to around 22 million hectares with production possibly reaching 65 million tons.
 
"The losses will give farmers reason to stop and reflect," he said.
 
Meanwhile, the cost of producing soybeans is seen rising because of higher input costs, in part because of Asian rust, rising land prices and the huge discounts on farm prices due to spiraling transport costs.
 
He said Brazil needs to think less about major projects such as building a link to the Pacific and spend more on improving roads.
 
"With the problems we are having this year, the prospect of a crop of 65 million tons is frightening," he said.
 
He said the situation had turned critical this year because of operational problems at Paranagua port and squarely blamed bad administration and intransigence by the state government.
 
The state government, however, blames the exporters and port operators for the port delays.
 
These delays and restricted truck availability are the key reasons China is continuing to buy U.S. beans, despite greater availability in Brazil and Argentina now, Pessoa said.
 
"If we don't invest in logistics, we could eventually see more customers going elsewhere. We can't miss the boat," he said.