SAO PAULO: Brazil's soybean area in the approaching 2016/2017 season will grow by 2 percent from this season, making it the smallest annual expansion in the past decade, as corn and tight credit limit expansion, a survey of eight analysts showed on Wednesday.
Area dedicated to planting soybeans in the new season that starts in September is expected to reach a record 33.9 million hectares (83.7 million acres), from 33.2 million hectares in the current 2015/2016 season, an average of forecasts polled showed.
If confirmed, the expansion in soy area would be the smallest since 2006/2007, when the area contracted by 9 percent due to unfavorable market conditions, according to the Agriculture Ministry's crop data.
Under normal weather, such area should produce a record 103.8 million tonnes of soybeans, up from 95.3 million tonnes earlier this season, analysts forecast.
Global weather patterns that are shifting into La Nina, which tends to mean drier weather in Brazil's southern grain belt, will create some uncertainty for the crop.
Brazil's area planted to soybeans over the past decade has grown by 61 percent as local producers responded to rapid expansion in global demand for the crop, especially from China, the world's largest buyer of soybeans.
At least 10 analysts consulted by Reuters had not finalized their estimates of the coming crop's size due to last minute alterations that farmers make right up to the start of planting.
One of the factors limiting the expansion of soybean area is the shortage of corn on the local market that drove prices to record levels earlier in 2016 and has supported them even in the peak of the winter crop harvest at roughly twice the levels they were at a year ago. The two crops share the same farmland.
Consultants Safras & Mercado was one of the analysts that expected producers to plant more corn this summer season, bucking the trend in recent years when farmers switched more corn area to soy in the main summer crop.
Tight credit conditions are also weighing on farmers' capacity to expand the area. Rising loan default and unemployment have prompted lenders to take a more cautious stance in Brazil's worst economic downturn in several decades.
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