Brazil's new soy crop area seen growing 2.3pc to 36.7mn hectares

SAO PAULO: Brazil's new soybean crop, which farmers are expected to start planting next month, is seen reaching 36.7 million hectares (90.68 million acres), an area 2.3% larger than seen in the previous crop, according to the average forecast from a poll of analysts.

Output of the new crop was seen on average at 122.8 million tonnes, 6.8% more than in the previous season, according to the poll. Analysts said expansion of soy planting will probably be limited by China's swine flu outbreak, lower global soy prices and the potential for higher transportation costs in Brazil.

If the poll's estimates are confirmed, Brazil would surpass the United States as the world's top producer. According to the latest USDA forecast, the US farmers are expected to produce 104.64 million tonnes in the current season that was hit by above-average rains.

Still, Brazilian farmers remained cautious.

"We have many things to worry about," said the head of soy producers association Aprosoja, Bartolomeu Braz Pereira.

"The issue with the minimum truck freight prices has not been solved. Production costs are high. And the trade spat between the US and China is very worrying," he said.

Analyst's projections accounted for a possible productivity recovery from last season's drought-hit crop that came in at 115 million tonnes, below the 2017/18 record of 119.3 million tonnes.

The Brazilian government is still evaluating demands from truckers regarding higher freight values. Since much of Brazil production is far from the ports and transported by trucks, a spike in transportation costs would hit farmers and traders.

Some analysts believe the US-China trade war has more negatives than positives for Brazil because it has hurt soybean prices, even though Brazilian soy has enjoyed premiums over Chicago values.

"The trade war and the swine flu outbreak in China are pressuring reference soy prices. These factors are limiting the growth in planted area in Brazil," said Aedson Pereira, a grain analyst with IEG FNP.