June 8, 2004

Brazil's 2004 Agriculture Growth Forecast To Fall On Soy Losses

Brazil's agricultural sector will only grow half as fast as expected this year due to bad weather and fungus attacks during the grain and oilseed season and the cancellation of soybean shipments to China, a leading farm association said Monday.

Agricultural gross domestic product is expected to rise by 3.15% in 2004, reaching 524.3 billion Brazilian reals ($1=BRL3.11), not over 6% as was expected, according to a report by Brazil's Agriculture and Ranching Confederation, or CNA.

Previously, it had forecast output would grow faster than the 6.5% registered in 2003.

As a result, projected agricultural exports will total around $28 billion, up 8.5% on the year before but below the $30 billion initially forecast.

According to Getulio Pernambuco, head of the CNA's economic department, growth will still be significant and expansion should top 6% again next year, assuming normal weather conditions.

He said losses to the soybean crop, which is pegged at around 50 million metric tons after initial forecasts indicated a crop of 60 million tons, cut into farmer profits while the Chinese government ban on Brazilian soybean exports from seven firms has virtually frozen trade.

Brazil is the world's largest producer of sugar, coffee and orange juice and the largest exporter of soy complex and beef.