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Depressed Prices not Seen Dropping Brazil's Soybean Acres
When soybeans reached their lowest value in Chicago since February (US$ 13.63 a bushel last week), it may have turned the red light on for some farmers. That is not the case, however, for the majority of growers down in Brazil.
Currently, most Brazilian farmers are buying inputs and getting ready for the new soybean crop. The value of the oilseed is an issue of concern, but farmers believe that prices can rebound or, in the worst case, move to a point where they are just able to pay the bills. On the other hand, international corn prices may push for a possible corn area reduction in Brazil and perhaps a slight soybean area increase.
Early estimates authored by Carlos Cogo, a Porto Alegre market analyst, predict that the Brazilian corn area, including both the summer and winter crop, would drop 0.1% to 38.8 million acres, while the soybean area could increase 2.9% to 76.5 million acres in 2014-2015. In some regions, however, corn is felt to have a larger drop in planting intentions.
Nelson Paludo, president of the Rural Association of Toledo, a town in Paraná, southern Brazil, says that in his region a lot of farmers would give up on planting corn because it's not profitable, and they would at least maintain the soybean area.
According to Paludo, the price of corn to growers in Toledo is currently R$ 18 (US$ 8.10) per bag of 60kg (2.2 bushels), while the value of soybeans there is R$ 56.60 (US$ 25.44) per bag.
"A profitable value for corn is R$ 22 and R$ 60 for soybeans. But as we harvest the second corn crop, the pay is very low, and corn is very costly. I guess it will 'disappear' in the summer, while soybeans will maintain the same area. The inputs are purchased," says Paludo.
A similar narrative is told by Raimundo Gregório, owner of Grãos da Terra, a grain consultancy from Luís Eduardo Magalhães, Bahia. He explains that in his region, soybeans compete with corn and cotton, but the prospects are better for the first one.
"There are worries, but soybeans have brought the best profits for several years. The confidence is really strong on that crop. Until October, the panorama can be changed for soybeans, but nobody expects much from corn," says Gregório.
Pedro Rodigueiro is a farmer from the northwest of Rio Grande do Sul, the southernmost state of Brazil. He thinks the ideal price for soybean varies from R$ 65 to R$ 70 per bag, but the value paid to producers in his region is now at R$ 58 bag. Still, Rodigueiro will maintain his 2,471 acres for the beans, and he is considering a reduction of his 741 acres corn surface planted last summer.
"I already acquired my inputs, and I see these numbers of a major crop in the U.S. as a little bit of speculation. I will stick with soybeans. What worries me the most is a 30% annual inflation that I saw on fertilizers and fungicides," reveals Rodigueiro.
But some larger scale farmers see the situation as very risky. Eduardo Peixoto, who farms on the border between Goiás and Mato Grosso do Sul, will plant 6,177 acres of soybeans and 1,976 acres of corn. He intended first to plant 2,471 acres of corn but changed his mind.
"The harvest of the second crop goes fast here, and we have plenty of corn to sell - not many storage bins available. For soybeans, the situation is better, but not much better. We can have profits, but the margins reduced sharply. We don't see an optimistic environment here," complains Peixoto.
In Mato Grosso, a slightly different picture is seen. Degraded areas are still being recovered, and soybeans are part of long-term planning. Therefore, the surface dedicated to the oilseed will continue to increase in 2014-2015.
According to the Mato Grosso Institute of Agricultural Economics, the soybean area would grow from 20.5 million acres this year to nearly 21.42 million acres in 2014-2015.
"We have a progressive increase of area planted here. But in the coming crop, this increase will be very limited because of the fall of soybean prices. And the area is just increasing because of a previous decision. In some areas, there will be financial losses," explains Ricardo Tomczyk, president of the Corn and Soybean Growers Association of Mato Grosso. Tomczyk says that is too early to talk about corn areas because most of the corn is planted in the winter as second crop, known as safrinha locally.
The Corn and Soybean Growers Association of Mato Grosso also sees plagues, caterpillars, and soybean rust as the source of most of their costs.
Some agronomists already expressed major worries about agronomic problems in Brazil and South America. They think that crop rotation is not used enough, and that there is a repeated use of the same chemical products. In an interview for a previous story on Agriculture.com, researcher Cecília Czepak from the Federal University of Goiás said that Brazilian farmers and South Americans in general should "change habits soon," or darker days will come.