Farmers will likely expand the area planted with soyabeans in Brazil for a ninth consecutive year, local analysts and farm groups said, even with prices of the country's main export crop down by a quarter from a year ago. Earlier this year, some analysts said the combination of low soya prices and rising seed and fertilizer costs could lead farmers to forgo bringing new area into production in 2015/16 for the first time in nearly a decade.
Most have now changed their views. "I don't see how we could see a decline in soya area," said Luiz Fernando Gutierrez, soya analyst at Safras & Mercado. He said corn and cotton prices were even lower than soya. Gutierrez estimates a mere 2 percent increase in area when the next soyabean crop is planted in September, which would be the smallest annual rise since 2006. That year was the last time soya area decreased in Brazil, one of the few countries thought to have more land available to expand agricultural activity significantly.
The potential for even slightly more soyabeans to reach the market early next year, after record crops from South America and the United States, could further lower prices. Brazil is the world's No 2 soyabean producer after the United States. July futures on the Chicago Board of Trade were at $9.25 per bushel on Friday, down 26 percent from a year earlier. Fernando Muraro, an analyst at AgRural consultancy, expects a modest 1.6 percent increase of 500,000 hectares in Brazil over last year's 31.5 million hectares. In April, he had forecast stable soya area.
Muraro changed his estimate after a larger-than-expected second corn crop lowered local corn prices, which he said would lead farmers in the south to favor soyabeans. Plenty could still change and farmers face a challenging scenario, he said. Brazil may see modest or no new fields in northeastern states that usually see double-digit growth. Anderson Galvao, chief executive officer of analysis firm Celeres, said he was still "betting on stability" though Celeres has not made a formal estimate of 2015/16 soya area yet.
Recession is looming in Brazil, limiting government funds as well as farmers' access to credit. Uncertainty also stems from the Brazilian real, which has weakened 30 percent over the past year. Farmers benefited from a stronger dollar when they sold their 2014/15 crop in the US currency but are losing much of those gains paying more for imported seeds, pesticides and fertilizers for the next crop.
Ricardo Tomczyk, president of soya grower's association Aprosoja in top growing state Mato Grosso, said farmers would be compensated for the higher input costs as long as the real stayed at current levels or weakened in the next year. Even so, he said lower soya prices meant they could no longer be certain investments in new fields would pay off and some older fields in Mato Grosso may even be abandoned.