August 17, 2012

Brazil may face possible soy seed, pesticide shortage

Syngenta said on Thursday (Aug 16) that plans to plant a record soy crop in Brazil could leave the country with a seed and pesticide shortage.

Brazil's area of soy to be planted in 2012-13 will likely surpass the 24.8 million hectares (61.3 million acres) last year by two million hectares, or 8%, as farmers eye record-high soy future prices, Laercio Giampani of Switzerland-based Syngenta said.

Brazil has transformed into an agricultural powerhouse in recent years, but hopes of surpassing the US and becoming the world's top soy producer could prove elusive due to lack of planning and infrastructure limitations.

The country's soy seed demand will likely increase by more than two million bags and most seed suppliers in the country have already cleared their inventory for the season, Giampani told Reuters.

"There will be an increased demand and we are looking at the possibility of having a lack of certain products in Brazil," he said just a few weeks before planting begins.

"If we have an unusual attack of insects or a disease, we may have a lack of pesticides," he added.

A drought resulted in a drop in output of Brazil's 2011-12 soy crop, and farmers are aiming for a comeback this year. They are choosing soy over cotton and corn, which are more expensive to produce and ship.

Grains markets are looking to Brazil to step up and help fill the gap in global supplies left by the worst drought in more than 50 years over the US grain belt, the largest producer and exporter of soy and corn.

Local producers will not literally run out of seed but they could be forced to turn to less than optimal varieties such as beans harvested from the previous crop that were never intended for planting, which will lead to a drop yields typically.