July 4, 2007

 

Brazil may surpass US soy production by 2009

 

 

Brazil will likely surpass US soy production by 2009 providing the country can control Asian soybean rust, Silvio Porto, of the National Commodities Supply Corporation or Conab, said Tuesday (July 3).

 

"If we can keep Asian soybean rust under control, Brazil will become the world's leading soy producer by 2009," Porto said during the release of 2006/07 crop data, Tuesday.

 

Brazil has banned winter soybean plantings in an attempt to curb rust from taking over during the main spring and summer crop season.

 

Porto, Conab's logistics director, was speaking on behalf of Conab's president, Wagner Rossi.

 

Brazil harvested slightly more than 58 million tonnes of soybeans in the 2006/07 crop.

 

Planting intention figures for the 2007/08 crop are to be announced in September.

 

Market analysts from brokerage firm Cerealpar and consulting group Safras & Mercado said Brazil could increase planted area by 5 percent if soy prices remain above US$9 per bushel on the Chicago Board of Trade and the dollar stays around BRL1.90.

 

Although most general consensus analysis suggests CBOT soy futures will rise above US$9.50 in the near term, the foreign exchange market expects the US dollar to weaken below BRL1.90 in the days ahead, making CBOT prices an important benchmark.

 

The weaker the dollar, the more CBOT will have to climb for Brazil to increase planted area from the 20 million hectares planted in 2006/07. The dollar is currently trading at BRL1.91.

 

Analysts said that the only inhibitor to soy growth is corn prices. If corn prices rise with soy, farmers in the south and southeast corn states will turn to corn, some expect.

 

"There's a lot of competition for space right now. If corn prices fall, they'll definitely plant more soybeans," said Antonio Carlos Ostrovsky, chief agronomist at the Coamo cooperative, Brazil's largest soy and grain farm cooperative.

 

Porto, on the other hand, said he doubted corn could impede soy expansion.

 

"Corn will stabilize. Soy has a place to move at these prices," he said.

 

Brazil is the No. 2 soy producer behind the US.  Soy and corn are Brazil's top two crops.