June 14, 2005


Brazil expects slower soybean production growth


Growth in Brazil's soybean production is expected to slow this year due to high production costs, lower commodity prices, and a stronger domestic currency that limit sales volume and revenue for farmers.


Brazil's 2005-06 total grain, oilseed and cotton area is estimated at 44.7 million hectares, up only 2 percent from last year's record level, according to the USDA


Brazil's cultivated land area has risen about 13.8 million hectares over the past 8 years, with soybeans making up about 70 percent of that area growth, and grains and cotton making up the rest.


Newly opened lands would be expected to get poor yields for several years as soil amendments take time to improve fertility. It would be very risky to cultivate soybeans on such lands in 2005-06 as a financial loss is almost certain, USDA says.


Other problems include limited credit availability for new soybean plantings in light of the high financial losses suffered by soybean farmers in 2004-05 and competition from corn as feed in Southern Brazil.


Soybean area is expected at 23.0 million hectares in 2005-06, nearly unchanged from the sown area of 23.25 million (harvested soybean area fell to 22.8 million hectares owing to drought) in 2004-05.


Soybean yields are forecast at a near-trend of 2.7 tonnes per hectare for 2005-06, assuming normal growing conditions and adequate control of Asian rust, while production is estimated at a record 62.0 million tonnes.

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