June 2, 2008
Brazil's soy production to rise by 7 percent in 2008-09
Brazil's soy production and area in 2008/09 are projected to increase by 7 percent, increasing production to 64.3 million tonnes after a record 61 million tonnes is expected in the 2007-08 year, according to a USDA report posted Friday (May 30, 2008) on the Foreign Agricultural Services Web site.
Brazil's oilseed sector is experiencing a relatively prosperous period thanks to high international prices and good overall climatic conditions, the report said.
Farmers produced a record soy crop of an estimated 60.1 million tonnes on 21.7 million hectares, 1 million tonnemore of soy on 4 percent more area than last year.
Soy yield remain close to last year's 2.8 tonnes per hectare, with less incidences of soy rust contributing to this year's gain.
The status of being a "new agricultural frontier" has given Brazil an edge in the soy business, since other world soy producers such as the US and Argentina face limitations, lacking available land for expansion, especially with corn area expansion taking place due to growing ethanol production.
In 2007/08, soy will make up nearly 50 percent of Brazil's total grains.
The report projects that farmers produced a record 60.1 million tonnes of soy on an area equivalent to the 2003/04 season. The Brazilian government's projections are for 59.5 million tonnes.
The report said several factors contribute to the continued lukewarm financial state of farmers. Although CBOT prices were at historic highs during the growing season, timing was everything for producers this year. Up to 70 percent of Mato Grosso farmers sold their crop before the CBOT price rally when prices hit US$16 per bushel; and sold at or below US$12. Only 20 percent of farmers sold their crop with US$16 per bushel prices.
Meanwhile, rising cost of inputs may also dampen farmers' interest in the crop. Fertilizers and herbicides have increased about 75 percent over the course of the season. So, in spite of the season's high international soy prices, earnings were not what they could have been, and farmers continue to carry debt.
Still, high prices and a good 2007/08 harvest are expected to stimulate a considerable area increase next year.
The extension and rollover of debt, which was announced by the Brazilian government in April, will be an important factor in the projected increase in area.
The North and Center-west should experience the majority of the area growth, and Mato Grosso, Maranhao, Piaui, Tocantins, and Western Bahia will experience highest growth relative to this year's area, the report said.
Corn prices will also affect soy area, and summer corn planting in Brazil should continue to rise modestly. A return to more soy and less corn planting in the US this year is expected to impact what are already historically high Brazilian corn prices.
Brazil has the technological conditions and area available to become the largest oilseed producer in the world. There are still an estimated 90 million hectares available in Brazil without causing deforestation. Nevertheless, farmer groups in Brazil complain that agricultural policy must change in order for Brazil to take the lead in soy production.
2006/07 Crop Situation
Crop conditions in Brazil were very good with the exception of the extreme South of Brazil in the states of Rio Grande do Sul and Santa Catarina. La Nina did not have the negative impact on Brazil that was expected before the season started.
However, it made enough of an impact in Rio Grande do Sul, Santa Catarina, and Mato Grosso do Sul for Conab to decrease its total production estimate by several hundred thousand tonnes in early May.
Lower yields in the South were balanced out by better-than-expected results in Mato Grosso. Soy were planted anywhere from 8 days to one month late, which resulted in significantly less soy rust but a very wet harvest, especially in the state of Mato Grosso. Actual losses in Northern Mato Grosso are minimal but the high humidity in the region is a compromise in bean quality.
