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Brazil state sees higher soybean seed sales, lower corn area

Agriculture.com Staff 07/28/2009 @ 8:40am

Luana Gomes is a contributing editor for Agriculture Online from Curitiba, Brazil. Gomes writes regularly for the Gazetadopovo newspaper.

CURITIBA, Brazil (Gazetadopovo newspaper) After losing over five million tons and US$ 1 billion worth of grains to drought last season, Brazilian southern state of Parana will plant less corn this year.

Planted area is expected to drop as much as 20% from last year in the state, to 1 million hectares in 2009/10. Informal surveys indicate that the smallest drop- about 10%- will occur in the Mid-South region of the state, where the drought was less severe. On the other hand, in the West and Southwest, where the losses were bigger, corn planted area might be reduced up to 30% this season, says Marcio Araujo, Pioneer Seed regional sales manager.

Losses from a drought-affected season, which had high input costs, indebted farmers and credit squeeze are pushing producers to plant soybeans instead of corn, says Araujo. "The demand for corn seeds is pretty low this year, much lower than expected." So far, sales have dropped 50% in Parana, but this number should go down over the next days, to about 30%, says Araujo.

"Soybean seeds sales are way up this year," confirms Marcelo Martins Pereira, a seed dealer in the city of Guarapuava (Mid-South Parana). He expects a drop of 20% in corn planting this year in Parana. The area, says Pereira, should go mostly to soybeans. "The real issue here is that farmers are only considering current prices when deciding what to plant. They see beans at US$ 375 and corn at US$ 125 a ton. What would you do? 80% of the planting decisions are made that way. But what they should be looking at is the future, the projected prices for commercialization."

"Farmer are unwilling to plant corn because they got scared after last year's drought. Prices didn't react quite like they expected," says grain producer Juliane Nardelle. Parana is the biggest corn producer in Brazil, responsible for about 25% of the national annual production of this grain. Despite the crop losses in the state last season, however, the prices did not go up because production was good in Mato Grosso and Goias, second and third biggest corn states in Brazil. Even though Parana saw a drop of 28% in its corn crop, national production was down only 16% from last year.

Also, the carryover stocks from 2007/08 into last season (08/09) stood at 11.8 million tons, the largest end of year stock ever. Parana, for instance, still has at least 2.4 million tons in stock, plus 4.6 million tons from the "safrinha", a winter corn crop that is being harvested now. Producers who saw corn prices reach US$ 208 around this time last year have recently been faced with prices as low as US$ 125 in Parana, below government price floor of US$ 137,5 per ton. In Mato Grosso, where corn supply is even bigger, prices are around US$ 75 per ton.

"We are now harvesting the result of a record crop in 2007/08. Could it be worse? Yes, if there hadn’t been losses in Parana. Though it (the drought) was bad for the individual farmer who lost part or all of his production, it helped balance national corn supply and demand," says Margorete Demarchi, from Seab (Parana State Agriculture Secretariat). According to her, "even if farmers plant less corn this year, it might not be enough to repair the damage caused by the record crop."

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