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November 17, 2008

 

Brazilian farmers worry about tumbling soy prices

 

 
Brazilian farmers worry about tumbling soy prices over the last 3 months due to country's weakening economy.

 

Many farmers face selling their crop next year at a loss, and they wonder how they will pay off loans taken out during the 2007-08 bumper harvest. In a town that is dependent on soy's fortunes, fear and worry have replaced optimism and hopefulness.

 

Milton Rossetto, who is about to become the president of a local farmers group said it is a coming storm and everybody is apprehensive.
 

What is happening in Primavera do Leste is playing out across soy country Brazil and indeed in rural towns elsewhere that depend on other crops. Prices for wheat, corn and rice also have plummeted in recent months. This comes on top of a general weakening of the Brazilian economy.

 

The decline in soy prices also affects soy farmers in Argentina and Paraguay.

 

Soy prices peaked at US$16.40 a bushel in July and now hover around US$9, said Richard Brock, a US-based agriculture consultant.

 

Soy production in Brazil had nearly doubled over the past 10 years.

 

The country now vies with the US to be the world's biggest soy exporter. Soy has become Brazil's biggest farm export, worth US$16.5 billion for the first 10 months this year, according to agriculture ministry figures. Growing demand by China and improving production have driven Brazil's soy industry.

 

Edilson Guimaraes, the undersecretary of the agriculture ministry said Brazilian soy production is expected to fall slightly for the 2008-09 harvest.Guimaraes said in an interview that the lack of financing is serious. He said that soy farmers would have access to a portion of the US$2.5 billion that the government is making available for loans to Brazilian companies that need financing.

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