December 6, 2006

AgRural: Brazil's 2006/07 soy crop estimated at 54.6-58 million tonnes

Brazil should harvest between 54.6 million and 58 million tonnes from the 2006/07 soy crop, local farm consultancy, AgRural, said Tuesday (Dec 5).

On average, Brazil should harvest 56.3 million tonnes, compared with 53.4 million in the 2005/06 crop and 55.9 million in AgRural's November estimate. Good weather in Rio Grande do Sul, the no. 3 soy producing state, led to the production increase estimate this month. Dry weather in parts of northern Mato Grosso could lead to reductions in the estimate next month, according to AgRural. No changes were made to the state's crop estimate this month, currently put at 15.3 million tonnes. The state is Brazil's leading soy producer.

Yields are expected to improve in the 2006/07 crop as well, averaging 2,643 kilogrammes per hectare, or 10 percent greater than the previous crop.

Planted area was reduced throughout centre-west and south-east. Southern states increased planted area by 5 percent because of favourable soybean prices in the local market and expectations that international soy prices will continue hovering near US$7 per bushel. In the Northeast, only Maranhao state is increasing soy fields. The state plants just 400,000 hectares, compared to 383,000 last season.

Brazil's total soy crop should take up 21.3 million hectares compared with 22.2 million in 2005/06. This month's estimate put the planted area slightly lower because of reductions seen in Tocantins state in the north. The landlocked state borders Mato Grosso and the massive Amazon state of Para on the west.

Sao Paulo, Minas Gerais and Goias have reduced planted area more than any other state, by 15 percent, 12 percent and 11 percent, respectively. The reductions are likely due to sugarcane expansion, though AgRural did not provide analysis for the cutbacks. Mato Grosso soy growers are planting 10 percent less area in 2006/07 because farmers there started the season with little access to credit, and a desire to cut overhead costs and reduce debts accrued from the last two soy crops.

There was some concern in September that farmers would reduce soy-planting intentions across the board by as much as 10 percent. That number started to fall when soybean prices began rising on the Chicago Board of Trade on expectations that the US, by far the no. 1 soy-producing nation, will reduce its soy fields in favour of corn to feed national ethanol demand. The main producing states in the south of Brazil soon opted to increase planted area, adding to the current bullish estimates for Brazilian soybeans.

Brazil is the world's no. 2 soy producer and exporter behind the US.