July 19, 2004

Safras Pegs Brazil 2004-05 Soy Prod At 66.6 Million MT, Up 33% On Year

Brazilian soybean production will total approximately 66.6 million metric tons in the 2004-05 season (October-September), some 33.5% higher than the 49.9 million tons produced in the last drought- and disease-hit season, according to the first new crop survey released by the local Safras e Mercado agricultural consultancy Friday.
 
The estimate is in line with the 66 million tons forecast by the U.S. Department of Agriculture earlier in the week.

The foundation of production growth this season will be a 23% recovery in average yields this year, said the report. In 2004-05, productivity is seen reaching 2,882 kilograms per hectare compared with 2,346 kg/hectare last year.
 
According to a Safras report, the estimate assumes favorable weather conditions, but takes into account the inevitability of crop losses to Asian rust and the fact that yields are normally low in the newly cultivated frontier lands in the northeast and center-west.
 
Safras is forecasting that planted area will total 23.09 million hectares, some 8.2% higher than the 21.34 million hectares cultivated this year.
 
As such, the soy belt will be of record size for the sixth consecutive year, although there is much less euphoria surrounding the prospects for soybeans this year following the recent slide in prices.
 
But farmers will plant soybeans regardless, especially in the frontier regions of the center-west, for a number of reasons. Firstly, average prices over the last year have been attractive; secondly, farmers still made profits last year despite crop losses and believe they can do so again; thirdly, there is more credit available for soybeans than for other crops; and finally soybeans are the easiest crop to sell.
 
"At this moment, prices aren't favorable for any (of the principal) products. In these circumstances, the liquidity of soy makes the difference," said Flavio Franca Jr., Safras' soy analyst.
 
However, farmers are aware that they will have to invest heavily to control Asian rust next year and still may incur losses.
 
The Safras estimate is the halfway point of a range in which it predicts output will fall of 64.5 million to 68.6 million tons.
 
The center-west state of Mato Grosso is expected to lead Brazil in production again next season with output of 17.7 million tons, up 18.7% from 14.9 million tons in 2003-04.
 
Next will come the southern state of Parana with production of 12.4 million tons, up 22.2% from the 10.1 million tons produced last year.