April 13, 2010

Brazil to increase soy sowings despite declining prices

Brazil's soy producers will plant their highest-ever acreage next season, despite growing pest problems and rising input and transport costs.

Soy growers in the world's second ranked producing country will raise sowings by about 100,000 hectares to 23.3 million hectares for 2010-11, matching a record set six years before, a report from the USDA's Brasilia bureau said.

The increase defies a fall in soy prices to their lowest last month since August 2007, undermined by expectations of record South American production, while many of farmers' bills have soared.

Fertiliser costs have jumped by 20% over the past month and continue to rise, the report said, adding that trucking rates had jumped by up to 50% this season thanks to a squeeze on capacity.

"High transportation costs continue to significantly affect producers' profitability," the briefing said, adding that infrastructure improvements such as new road and rail routes were failing to keep up with production growth.

Furthermore, farmers needed to make significant investments in sprays to keep pests until control. "Lack of crop rotation practices in the North and Northeast regions has amplified disease and pest occurrences," the bureau said.