May 27, 2011

 

Earnings encourage Brazilian soy farmers to enlarge sowing area

 

 

Heightened by soaring profits in 2010/11, soy farmers in Brazil will probably enlarge plantings in the following season, thus, increasing the production of the world's second-largest soy producer to another record high.

 

Analysts said the crop, which will begin to be sowed in September, could reach up to 75 million tonnes, up from the record 73.6 million tonnes estimated for the current season.

 

"We could see the biggest increase in planted area in the last three years, due to high soy prices and extraordinary yields in 2010/11. Farmers are very well-off," said an analyst.

 

Chicago soy prices <Sc1> are trading up nearly 50% from a year ago at just shy of US$14 a bushel.

 

With weather conditions considered close to ideal, yields in the 2010/11 season were a record high 3.05 tonnes per hectare compared with 2.93 tonnes the year before, according to the government. The planted area reached 24.15 million hectares, up 700,000 hectares.

 

The analyst said that one million hectares could be added to the planted area in 2011/12 due to favourable market conditions.

 

The expansion would take place in the states of Tocantins, Piaui, Maranhao and Bahia, in Brazil's north-northeast region, as well as in the eastern portion of Mato Grosso, the country's number one soy producer, located in the centre-west.

 

"Our initial expectation is of an increase in area of 3-5% but it will all depend on the size of the US crop this year," said a broker.

 

Although farmers are just over four months away from the planting period, about 80% of the fertiliser and seeds that are going to be used in the new crop have been bought already, the broker said.

 

Brazil's national fertiliser industry Anda said earlier this week that sales of fertiliser from January through April rose 14% from the same period in 2010, as high commodity prices prompted producers to invest in their farms.

 

The broker added that 5% of the expected soy output from next crop has already been sold in advance by farmers.