Brazil poised to produce bumper 2010-11 soybean crop
Brazil's soybean farmers could notch up a bumper crop in the upcoming 2010-11 crop season as farmers shift away from corn.
Brazil--the world's second-largest soybean exporter after the U.S.--is likely to expand the area dedicated to soybeans by 3%-5% in the 2010-11 crop season.
Moreover, although farmers haven't started planting yet--and factors from the weather through to price swings can alter estimates--several organizations are already suggesting the likelihood of a second consecutive record for production of 70 million-71 million metric tons. But most, however, admit a lot can happen before the beans start to trickle into the warehouses in December or January.
A new record crop could bode bearish for world soybean prices on the Chicago Board of Trade but traders also see continued demand from buyers such as China. This demand will therefore soak up any extra beans from Brazil and can continue to support prices. Chicago Board of Trade November soybeans on Monday were 4 cents higher in early trade at $10.30 a bushel.
If the forecasts are proven accurate, the bumper crop will rise above this year's record of 68.7 million tons on 23.4 million hectares to deliver extra supplies for local crushers and bean-hungry importers such as China.
"Farmers see prices for soybeans as more attractive than other crops such as corn and they should plant more beans next season," Eduardo Godoi, an analyst at consulting firm AgRural in Mato Grosso, told Dow Jones Newswires.
Moreover, recent high prices are also likely to stimulate the likelihood of more soybeans being planted compared to other crops, he said.
AgRural said Brazil's farmers could produce around 70 million tons of soybeans in 2010-11. Farmers should also expand their area planted with beans by 3% to 23.4 million hectares in 2010-11 compared to 2009-10, which ended harvesting in May, according to the consultancy.
Godoi said farmers, especially in the sprawling grain belt of Parana and Rio Grande do Sul states--that are near to the main grain ports--secured profits of on average 800 Brazilian real ($456) per hectare in 2009-10 for beans used for food, animal feed and biofuels. This compares to BRL400 for corn, which has higher costs than soy for inputs and lower prices, Godoi said. "Soy is easily more profitable," he said.
Godoi said that although La Nina weather phenomena can cause prolonged periods of dry weather especially in southern Brazil, this could further prompt farmers to plant more soy than corn. "Soybeans are more robust and drought resistant [than corn]," he said.
La Nina involves a cooling of the surface waters off the coasts of South America and generally causes decreased rainfall and cooler temperatures in Brazilian farmlands.
With more fields planted with soy instead of corn, farmers will see new records in its top three soy states of Mato Grosso, Parana and Rio Grande do Sul, Godoi said.
Carlos Lovatelli, president of Brazilian Vegetable Oils Industry Association, or Abiove, also pegs Brazil's soy crop at around 70 million tons.