Brazil starts harvesting soy amid currency woes

 

 

Brazilian farmers have started early on harvesting an expected bumper 2009-10 soy crop whose development has been helped by above-average rains, but the strong Brazilian real will limit profits.

 

Brokers said the first cargoes of soy arrived last week in silos around the north of the country's No. 1 soy producing state, Mato Grosso.

 

Field work started last Monday in Lucas do Rio Verde, and areas in Tapurah have also started on harvesting, while some other areas will start harvesting in the next few days, said a broker at a Cargill silo.

 

Brazilian soy planting started around September in centre-western states and finishes in December in the southernmost state Rio Grande do Sul. Harvesting starts in late December to January in Mato Grosso and winds down in May in the south.

 

Mato Grosso is expected to harvest a record soy crop of around 18.5 million tonnes. Growers have begun harvesting earlier than usual after rains in August and September helped farmers plant early. New soy varieties and machinery have also helped bring forward the start of harvesting.

 

About 2.2 million hectares of planted area are expected to be harvested in the first two months of 2010, up from 1.7 million hectares in the same period this year, according to Mato Grosso's Soybean Growers Association (Aprosoja).

 

Around 23 million hectares of Brazil's farming land is planted with soy.

 

The volume of soy to be gathered in January is a lot higher than usual, said Aprosoja's executive director, Marcelo Duarte.

 

Farmers have been keen to plant soy as early as possible every year in Mato Grosso so they are able to seed a winter corn or cotton crop in the same fields right after harvesting soy.

 

A premium paid by crushers or exporters for soy delivered to them in January has provided an additional incentive.

 

Due to the seasonal low availability, farmers who manage to deliver soy by January 10 will receive on average BRL35 (US$11.5) per 60-kg bag, compared with around BRL28 (US$16.1) in the months after that, in the Sorriso area.

 

On the other hand, the Brazilian real has appreciated nearly 40% since early March and now trades at around 1.7 per dollar compared with about 2.4 early in the year. This will hurt farmers' profitability, and prices are at the break-even point in most areas in Mato Grosso, said AgRural analyst Eduardo Godoi.

 

Due to the long distance to ports, prices paid for soy in the north of Mato Grosso are usually the lowest in the country.

 

Brazil's grain belt has been wetter than usual for this time of the year due to the El Nino weather phenomenon. This is positive for crop development but increases the risk for spread of fungal diseases like soy rust, which can destroy 80% of soy in the field if left untreated, but farmers have taken precaution measures so far.

 

Excess rain in November has contributed to a delay in planting in Rio Grande do Sul, in Brazil's southern extremity. The state, No. 3 in soy production terms, has planted about 85% of the area expected to be sown, down from an average of 93-94% for this time in previous years. But once planted, rainfall should help it develop promptly.