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Marketing seen as important, difficult in Brazil

Agriculture.com Staff 08/24/2007 @ 12:55pm

Beyond producing, there is another commonality between U.S. and Brazilian producers: marketing soybeans.

Much like in the U.S., South America producers need to be better marketers to stay competitive,

Daniele Siqueira, a Brazilian market analyst with AgRural Commodities told the Agriculture Online Marketing Talk Meeting in Des Moines, Thursday.

"We are seeing more and more producers get involved in marketing tools," Siqueira said. "They have to or they will be bought out by a larger producer."

With the higher price of inputs, a fluctuating Real currency, high taxes, and lack of financial assistance from the government or banks, many Brazil producers face becoming better marketers or having to rent or sell their land, Siqueira said.

"They sell their crop early because they need the money to pay bills," Siqueira said. "But, there are more market advisors and consultants working with the producers to help them get better prices."

Paulo Zandonade, a Mato Grosso producer visiting in Iowa this week, said in a separate interview that using marketing tools is new.

"We don't have much experience with futures trading on the Chicago Board of Trade. But, we are trying to learn and staying positive," Zandonade said. "Traders are exchanging information."

REALLOCATING NOT INCREASING SOYBEAN ACRES

AgRural estimates Brazil's 2007/2008 soybean production at 63.3 million metric tons, up 7% from a year ago, Siqueira said. The agency's yield estimate is pegged at the equivalent of 46.4 bushels per acre.

"After costs, we project a Mato Grosso producer will see a 15% profit margin," Siqueira said.

In 2007/2008, Brazil will raise between 56.7-57.0 million metric tons of soybeans, Zandonade estimates.

Only the big producers will increase their soybean production. Zandonade plans to reduce his soybean acres by 10%.

"We have more corn planting, due to price, and more cotton production in my area. So, this is competing with any increases of soybean acres," Zandonade said. "I think it's too early to tell the big picture."

Because Brazil is using all its land available, the increase in soybean production comes as a result of reallocation, not the clearing of new land.

"I think what's happening is the larger farmers are increasing acres by buying out smaller ones. It's not the smaller or medium-sized farmer planting more acres," Zandonade said."

Zandonade plans to reduce his soybean acres this year to 4,000 acres compared to 4,700 a year ago. The Brazilian producer will increase his cotton acres.

HIGHER INPUT COSTS

As he begins to purchase inputs for the planting season that starts in October, Zandonade is already seeing much higher costs.

"A bag of soybeans costs $25 this year, and fertilizer runs $400/ton," Zandonade said.

Because of a short country supply, fertilizer is 30% higher this year compared to a year ago.

Zandonade says he is making about $12 per bag of soybeans, less than the $15 per bag producers being offered at the ports in southern Brazil.

Beyond producing, there is another commonality between U.S. and Brazilian producers: marketing soybeans.

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