July 23, 2008

  

Brazil '08-'09 soy acreage seen up to 5 percent

 

 

Brazil will likely increase national soy acreage by 3 percent to 5 percent in the 2008-09 crop, Michael Cordonnier said Tuesday (July 22) in a Soy & Corn Advisor Inc. report to clients.

  

"If soy prices keep falling and fertilizer prices keep rising, my estimate may end up being overly optimistic," Cordonnier wrote.

  

Soy futures on the Chicago Board of Trade are seen opening 10 to 12 cents higher Tuesday morning after closing down Monday to $14.03 for the November contract.

  

Prices have risen by at least 40 percent for various types of fertilizer products. If soy prices trend downward, then the leading soy producer state of Mato Grosso could end up at break-even levels at best, Cordonnier wrote.

  

"I have been calculating that it would take a May (CBOT 2009) price of about $14 per bushel for an average farmer in Mato Grosso to break even. I don't know where the prices will end up over the next few months as Brazilian farmers make their planting decisions, but they have certainly moved in the wrong direction for soy farmers in Mato Grosso," he wrote.

  

The state's farmers increased planting area for soy by around 10 percent last year, the highest expansion percentage in all of Brazil's soy states.

  

Weaker soy prices wouldn't be so bad if the US dollar strengthened in Brazil, but the dollar continues its decline against the local currency, the real. The dollar is currently worth 1.58 Brazilian reals. It started the year at BRL1.75, declined to BRL1.60 by June and fell below that for the first time on June 25.

  

Brazil is the world's No. 2 soy producer behind the US.

  

Cordonnier said No. 3 producer, Argentina, would increase planted area by 2 percent to 5 percent, as well.
   

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