December 31, 2007

High soy and corn prices to fetch lavish capital for Brazil's agribusiness in 2008

Soy and corn, which accounts for 90 percent of Brazil's grain production, are forecast to remain expensive next year due to escalating global demand, thus generating inflow of capital to the country's agribusiness.

Last year, Brazil reported total revenues of US$10.8 billion from soy exports, and of US$ 1.7 billion from corn.

Edilson Guimarães, secretary for Agricultural Policy at the Ministry of Agriculture and Supply, anticipates soy and corn prices not to retreat in 2008 due to strong international demand.

Expensive soy prices helped to maintain the sector's exports this year. Despite the fall of exports from 38 million tonnes in 2006 to 36.9 million tonnes in 2007, the high pricing fetched 22.3 percent increase in revenues.

Soy sales were up from US$8.8 billion to US$10.8 billion. The average price for one tonne of soy exported by Brazil increased from US$226 to US$ 281 on-year. In November, the average price of exported soy was US$343.

Meanwhile, corn may not have as much significant weight as soy, but foreigh sales intensified in 2007. From 3.6 million tonnes sold in January to November 2006, the exported volume went as high as 10 million tonnes in the same period this year, marking a 176.6-percent rise.

The high price of corn also ensured higher revenues from US$421 million to US$ 1.7 billion, a 307 percent expansion. The price per tonne exported climbed from US$116 to US$ 171.

Guimarães pointed that EU has been the main importer of corn exports and paid handsomely for non-transgenic corn.

Industry experts forecast a more robust scenario in soy and corn production in 2008 due to palpable global demand.