Update: Brazil soybeans not out of the woods yet
EDITOR'S NOTE: Daniele Siqueira is a markets analyst for AgÃªncia Rural Commodities AgrÃcolas in Curitiba, Brazil.
After a dry start to the growing season, 2007/08 Brazilian soybean crop conditions are improving.
Although the planting is still late in the northeast Brazil, 95% of the total estimated area was planted as of December 11, unchanged from one year ago, according to AgRural, a local agribusiness consulting firm.
The lack of rain early in the season have caused some concerns, but the high prices on Chicago Board of Trade and the strong demand for Brazilian soybeans helped producers to keep their initial intentions of planting a larger area this year. AgRural estimates that Brazil is planting 22.4 million hectares (55.3 million acres) this season, a 5% increase from last year and almost the same area planted two years ago.
Nonetheless, this present normal planting pace does not mean that the Brazilian crop is safe. Because of the dry start, the bulk of the area was planted later and in a more concentrated period than usual, and this could result in a bigger weather threat. This is an active La Nina season and the crop can be damaged by drought in the South and excessive rains in the Center West. These two regions plant 84% of the Brazilian soybean area.
â€œFor the Center West we expect soaking rains in the second half of February, a time when the majority of the crop would be cut in this region, if the weather had been favorable early in the season. These rains can be harmful to the yields and to the harvestâ€, says Fernando Muraro, senior market analyst with AgRural. The soybean rust is also a concern, even though the disease has not been a real threat so far this year.
AgRural estimates that Brazil will produce 62.4 million tons (2.29 billion bushels) of soybeans in 2007/08 season. This is a record number, but it does not consider the weather problems yet. In 2006/07, Brazil produced 59.3 million tons (2.18 billion bushels), according to AgRural, and 58.4 million tons (2.15 billion bushels), according to Brazilian Ministry of Agriculture.
Another issue is the second crop of corn, planted in February, after soybeanâ€™s harvest. If the soybean crop could be planted earlier, Brazilian farmers would be able to increase the corn acreage up to 20%, says Muraro. However, with the late start in soybean crop, the estimated increase in the second crop of corn is around 9% now, which means a planted area of 5 million hectares (12.4 million acres).
Planting the second crop of corn later than normal is a risk because the dry season in some of the main Brazilian corn producing states begins in March. â€œBut, even with the weather threat, many farmers will take a shot and plant more corn in 2008, because corn prices in Brazil are the highest ever, due to a strong demand here and abroadâ€, says Muraro. â€œAnd if they had more seeds available, they would certainly plant even moreâ€, the analyst says.