July 10, 2007

 

Doubts cast on soy field expansion in Brazil's leading soy state

 

 

Brazil's internationally known soy grower, Blairo Maggi, said he doubts there will be major expansion in Mato Grosso soy fields in the 2007/08 crop, even as soy prices push near US$9 per bushel on the Chicago Board of Trade, business daily Valor Economico reported Monday (July 9).

 

"For now, producers' planting intentions are to maintain area from last year," Maggi said in Valor.

 

"We could see some areas that were left vacant over the last year's return," he said. "But to go back to that rhythm we had before, to add another million hectares a year, I doubt very much."

 

Known as the "soy king" in the local and international press, Maggi is now governor of Mato Grosso, Brazil's No. 1 soy producing state. He did not say how much the state could increase planted area.

 

Rui Prado, president of the Mato Grosso Soy Producers Association, told Dow Jones Newswires on July 5 that the state could increase planted area by as much as 5 percent in the best-case scenario, citing government farm debt renegotiations and soy futures over US$9 per bushel.

 

Maggi said farmer debt and a weak dollar were the biggest inhibitors to soy field expansion in the state, not Chicago soy futures.

 

The dollar is trading at intraday seven-year lows on Monday, at BRL1.89.

 

In 2006/07, the state planted 5.1 million hectares out of the 20 million hectares planted nationwide. Mato Grosso harvested around 15 million tonnes of soybeans this season.

 

Brazil is the No. 2 soy producer behind the US.

 

Drastic reductions in soy areas in the US to make room for corn to feed American ethanol demand will reduce soy supply worldwide, leading to the higher prices on the Chicago Board of Trade.

 

Most estimates are for Brazil to increase area by 5 percent in 2007-08, but that figure would have to be as high as 15 percent to make up for reductions in soy areas in the US, according to agribusiness consulting firm, Safras & Mercado.