Brazilian farmers are expected to plant at least 5 percent less land with corn for the first 2008-09 harvest, largely in favour of soy, due to spiralling costs and low corn prices, analysts said this week.

 

Paulo Molinari, a grains analyst at consulting firm Safras & Mercado, said Brazilian farmers will plant corn on only 6 million hectares during the first corn crop, down 5.1 percent, compared to the same period last year.

 

"This is because of high fertiliser prices and low domestic corn prices," Molinari told Dow Jones Newswires.

 

Brazil has two corn harvests each year. The first corn is planted from August through December, while the second corn crop is planted from February through March.

 

The spot price on Tuesday for corn stood at BRL 23 (US$12.5) per 60-kilogram bag, down almost 5 percent from the same period a month earlier, according to the Center for Advanced Applied Economic Studies' Cepea/Esalq index.

 

Parana state, a leading corn-producing region, should see an 8 percent fall in the planted area in the first harvest in 2008-08 versus the first harvest of 2007-08, while in Rio Grande do Sul state, a 10 percent fall in the planted area is expected.

 

Molinari estimated that the 2008-09 second harvest will remain steady at around 4.8 million hectares compared to 2007-08.

 

Steve Cachia, a grains-market analyst at brokerage firm Cerealpar, is even more pessimistic. The area devoted to corn in the first harvest should fall from 5-7 percent if nothing changes in the next few weeks, he said.

 

Corn farmers need to reduce the use of fertiliser as well as the planted area, as prices have fallen due to Brazil's large corn stocks, Cachia said. "Corn farmers are seeing negative margins in some cases," he said.

 

Cachia said it is still too early to know whether Brazil's second corn harvest will decrease in area.

 

Laurence Gomes, investor relations director of Brazilian agribusiness company SLC Agricola, agreed that Brazil's area devoted to corn should fall by about 5 percent.

 

 

SLC Agricola expects to grow more soy in 2008-09 than corn or cotton, and Gomes expects other farmers to do likewise.

 

David Goncalves, a consultant at FC Stone, said Brazilian farmers will opt to plant more soy than corn, using areas on the edges of their corn fields to grow soy.

 

But despite many farmers opting to plant more soy, Goncalves doesn't expect a large increase in soy area. He estimates the area devoted to soy to grow 3 percent at most.

 

Farmers have also seen lower prices and higher costs for soy in recent months, so they will also cut back on fertiliser and leave some land idle.

 

Corn is Brazil's No. 2 crop in acreage behind soy, which is Brazil's leading farm commodity.