September 6, 2006

 

Brazil's soy planting for 2006/07 seen down 7.3 percent

 

 

Brazilian soy farmers will reduce planted area by 7.3 percent to 20.5 million hectares in the upcoming 2006/07 season (October-September), a smaller fall-off than previously forecast due to falling production costs as well as a greater supply of available credit, said local consulting firm Agroconsult in a new estimate released Tuesday (Sep 5).

 

In July, the consultancy forecast a far heftier drop of 14.5 percent from the 22.1 million hectares planted for the 2005/06 harvest.

 

However, "the input industries, principally the agrochemical companies as well as trading companies have lessened the reduction of credit to producers," said Douglas Nakazone, an Agroconsult analyst.

 

At the same time, production costs for inputs such as seeds, fertilisers and other agrochemicals have also tumbled, due to a stronger Brazilian real against the dollar, he added.

 

Average prices for agrochemicals in Brazil's key centre-south agricultural region have dropped 21.2 percent in the 12 months leading up to July, as weak demand from farmers has slashed sales, according to a study released last week by the National Commodities Supply Corp (Conab).

 

Just under a fifth of the costs of production for soy cultivation in this area are composed of agrochemical costs, said Conab in the same study.

 

In the new forecast, the country's biggest soy state of Mato Grosso is now seen reducing its planted area by 13.4 percent, compared to a previous estimate of a 26.4 percent drop in planted area, said Agroconsult.

 

However, much will depend on whether farmers in the state manage to obtain credit for the new crop in coming days and weeks, the consultancy added.

 

Agroconsult now pegs soy output for the 2006/07 season at 52.1 million tonnes, 1.3 percent less than the 52.8 million tonnes harvested in the current 2005/06 season, but higher than the 49 million tonnes forecast in the July estimate.

 

Despite the improved forecast, local producers will almost certainly seek to further reduce production costs by bypassing the use of inputs such as pesticides, herbicides and fertilisers, which could lead to a greater risk of crop damage in the coming season, the consultancy added.

 

Brazil is the world's second leading soy exporter, after the US.