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Brazil: Still On Pace For Record Soybeans
Jan. 15, 2008
Planting started slowly due to late rains, but the percentage of plants in vegetative development has now almost caught up with last year's numbers. Although precipitation to date has been sufficient, rain could be in short supply this year due to La Nina conditions in the South and Center-West, which could hurt crop yields.
The large crop was motivated by the high price of soy at planting, which has continued to climb to historic levels. This will not only help farmers out of the debt still carried from the 2004/05 and 05/06 seasons, but it will put them in a position to make a considerable profit.
The main competition for soybeans has been corn, which is also at very high price levels. This year, however, the lower-than-expected soybean area is attributed to high corn prices, and may be more profitable than soy in areas that use higher levels of agricultural technology and inputs. According to the Brazilian Agriculture Ministry, corn prices encouraged many soybean farmers to plant corn on part of their land, even if they had limited experience growing corn. Some soybean area has also gone to sugarcane, due to Brazil's high demand for ethanol.
Credit has also been more widely available for the crop year, also has farmers to plant as much as possible, whether soybeans or corn. Limits to the growth include transportation costs, which are the highest in the world among soybean producers, and the high cost of fuel and other inputs, which cut into producers' profitability. In addition, the gradual rise of the Brazilian Real's exchange rate with the US dollar has cheapened Brazilian exports, lowering profits.
Soybean rust disease also continues to hinder farmers' efforts in Brazil. For the crop year to date, there have been only 55 cases of of the disease registered, which is well behind the 140 cases registered last year at this time. According to the Brazilian Agricultural Research Service, Embrapa, the low number is due to the delay in planting as well as individual states' bans on monocropping - obligating by law that the land be without soybeans for a period during the winter season. Dry weather this season has also helped to keep rust from spreading.
Farmers are generally not cutting corners on input costs this year as they look to generate as much yield as possible, and ample credit is available. Biotech seed use is expected to increase another 10% this year, making up 60% of the total soybeans grown in Brazil. Overall fertilizer purchases are up 15% in the country as well, despite the high cost, and USDA-FAS says that sources indicate that fungicide purchases are up as well.
Source: Farm Chemical International
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