December 7, 2005

Brazil raises 2005-06 soy crop estimates

The National Commodities Corp of Brazil's Agriculture Ministry said Tuesday that the 2005-06 grain crop would be between 122.7 million and 124.9 million tonnes, about 9.2 million tonnes more than the 2004-05 grain crop.

Of the total, soy is expected to produce between 57.3 million and 58.5 million tonnes, a slight increase for the government's first estimate of the 2005-06 crop in October, which expected a minimum soy crop harvest of 56.9 million tonnes. The maximum volume of 58.5 million tonnes remains unchanged.

"The soy crop is going really well, despite new cases of Asian rust in Mato Grosso do Sul," said Seneri Paludo, a soy market analyst at AgRural, an agriculture market research firm.

Soy production will increase despite a fairly drastic reduction in soy planted area. Soy farmers nationwide have reduced planting by roughly 6 percent to fall between 21.7 million hectares and 22.1 million hectares, compared with 23.3 million hectares planted in the 2004-05 soy harvest.

Dry weather from November 2004 to February 2005 caused soy farmers in large producer states like Rio Grande do Sul, Parana and Mato Grosso do Sul to face massive losses in the 2004-05 harvest. Rio Grande do Sul alone lost 74 percent of its soybean crop.

As a result, soy producers in Parana and Rio Grande do Sul have migrated to corn instead. Soy's loss has clearly been corn's gain, with an increase in planted area of roughly 5.9 percent, to fall between 9.4 million hectares and 9.6 million hectares, compared with 9 million hectares planted in the 2004-05 crop.

Corn production for the 2005-06 harvest is expected to rise by at least 18.4 percent to 32 million tonnes, up from 27 million tonnes harvested this year.

Most of Brazil's corn is consumed domestically. Brazil is the world's second largest soy exporter after the US.