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Brazilians Buy Inputs for 2019, Soybean Acres Seen Up 3%

Soybeans remain the most profitable crop.

As trade tensions grow between the U.S. and China, Brazil aims quietly to increase its soybean surface. The trade spat between both powers is just one of the reasons for the long-term trend of the oilseed expansion in the South American country.

Nicolas Rubio, USDA's attaché in Brazil, reports that forecasts for 2018/19 soybean production are set at 115 million metric tons (mmt), the second largest crop on record.

“The 2018/19 planted area is forecast to increase to a record of 35.8 million hectares (88.4 million acres) due to higher prices, higher expected demand by Chinese buyers, and an increase in domestic consumption,” Rubio stated in his latest report.
Exports for the 2018/19 Marketing Year are forecast at 67 mmt and soybeans destined for processing will reach a record of 44 mmt due to the economic recovery and new biodiesel blending mandate, according to Rubio.

Flavio Roberto França Jr., an analyst at Datagro, a consultancy based in the greater São Paulo area, lists several reasons for the expansion. The first is that the total demand from China is expected to increase. The second is that the preference of China for South American beans tend to grow with more tariff rates for American goods.

But França Jr. highlights the key strongest factors: available land and the profitability of soybeans compared with other crops in Brazil. Depending on the region, soybean crops may border rice, corn, cotton, sugarcane, sunflower, or even coffee and citrus crops.

“Soybeans are, by far, the most profitable between all of those,” says the analyst in an interview with Agriculture.com.

In the view of França Junior, an estimate of 3% expansion of the soybean surface in Brazil would be a modest one. Using the example of 2017-2018, that the most optimistic estimates had forecast a 2% growth, the actual size of the crop was bigger. Brazilian expects to harvest 116.17 million metric tons in 2018.

“All conditions being favorable, I’m being pessimistic when I say the Brazilian crop will grow by 3%,” analyzes França Jr.

 The Mato Grosso Institute of Agricultural Economics (Imea) was asked by Agriculture.com about current numbers of purchase inputs for the 2018-2019 soybean crop, but did not want to release data at this point. “We are seeing a movement in purchases since January. Now, the purchases are happening faster,” says Marcel During, an analyst at Imea. Mato Grosso is the largest producing state in Brazil.

A contrast is seen in the state of Rio Grande do Sul where winter crops, like wheat and oats are common. The state is the southernmost in Brazil. “I have never seen a movement so slow for input purchases of the next year’s crop. Winter crops have zero interest and are beating the farmer’s income,” says Carlos Dellavalle, an agronomist and professor who advises farmers in Northwest of Rio Grande do Sul.

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