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Brazilians Ready Planters for New Soybean Season

PORTO ALEGRE, Brazil ( may sound surprising for some in the U.S., but farmers in Brazil will increase the soybean area and expect a new record crop, according to producers attending this week's ag expo in the southern part of the country.

For the 2014/15 crop season that starts this month, Celeres consultancy puts an early forecast of production of 91.35 million tons of soybeans. This would be a 6% hike compared to the current crop.

The soybean area surface, according to Celeres, would increase 3.6% and would reach 77.09 million acres in 2014/2015. "Even though there are fears about the American crop, the good profitability of soybeans in the last seasons, and better earnings compared to other crops like corn will boost an area expansion of the oilseed," Celeres stated in a recent report.

Carlos Cogo, a market analyst from Porto Alegre, Rio Grande do Sul, also bets on a similar acreage increase. And he forecasts that the corn area would plummet 8.6% in the summer (September-November), while in the second crop there would be a 2.2% jump. “Farmers are not likely to change their plans for the 2014/2015 crop because a big part of the inputs were already purchased,” explained the analyst.

Expointer is one of the largest farm shows in South America, and it is held at this part of the year specifically to offer new technologies to farmers looking for the next summer crop in Esteio, in the greater Porto Alegre area. What is heard from farmers and machinery dealerships just confirms what analysts have said.

The soybean area might increase mostly in the latest agricultural frontiers in the country, and it would be maintained in other traditional areas. In the first months of the year, there was a fall of 20% in agricultural machinery sales from January to June because of fewer subsidized loans of the Brazilian National Bank of Economic and Social Development. From January to April, the bank pumped R$ 3.7 billion (US$ 1.64 billion approximately) for the purchase of agricultural machinery made in Brazil, which is a fall from the R$ 5.7 billion.

Emerson Cavalli is a sales supervisor of Supertratores, a New Holland dealership that serves about a third of the Rio Grande do Sul state. The region served by the dealership is the southern part of the state, an agricultural frontier that has shifted gradually from rice and cattle to soybeans. Cavalli revealed that this lack of loans was not felt in the region, and investments are significant.

"There is a case of a farmer, who is my customer, who purchased six harvesters, two planters, two sprayers, and three tractors in a period of about three crop seasons. Of course, his soybean area jumped from 98 acres to 88,464 acres in the three-year period. He will invest more and more as soybeans continue to bring profits," revealed Cavalli.

Lack of credit drops machinery sales

In other regions, there was a different reality. Toni Ferrarin, executive-president of Agrofel, a New Holland dealership with nine units in the Northwest of Rio Grande do Sul and one in Mato Grosso do Sul, saw difficulties in selling machinery.

"As there were a lot of delays to release credit, a lot of deals were cancelled. There is a drop of 20% of sales approximately, but I think a recovery will be seen. Combine sales are expected to be big," he told

Korean company LS Tractor entered the Brazilian market in 2013 and rapidly has gained market share. Brazil has an average of about 55,000 tractor sales, and the Korean company already has 3,000 tractor sales. André Rorato, a commercial director at LS Mitron Brasil, thinks the company was benefited by the loan delays.

"In 2013, we had 12 dealerships. Now we have 26 dealerships in the country. Farmers couldn't wait for us to get in the market. Our target is small farmers," says Rorato. Unlike in the U.S., where the niche market of LS is hobby farmers, in Brazil they have small farmers as a target and those are about 800,000 farmers.

Also at Expointer, farmer Cesar Rebesquini, who is from Passo Fundo, a traditional soybean area in the northwest of Rio Grande do Sul, did not want to buy new tractors or new harvesters this year. But he says that he will increase his soybean area from 1,112 acres to 1,359 acres and cut the 247 corn acres planted last year.

"I really can't pay for the corn seeds, and the corn price is not worthy at all. You add the price of diesel and you plant corn, you get into endless trouble if you still plant corn," evaluated the farmer.

One farmer seems to be an exception and told a different tale. Juliano Rodrigues Vieira farms in the northeastern part of Rio Grande do Sul and intends to plant 1,482 acres of corn, 40.4 acres of kidney beans, and no surface for soybeans. Last year, he planted around 296 acres of soy.

"The perspective is of a bad price. But you never know what is going to happen. It is always good to rotate the crops," explained Vieira, who purchased a S540 John Deere combine.

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