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Soybean Production In Brazil Lower in 2015-16.

Brazilian soybean production will fall next season for the first time in nearly a decade, slowing growth to a crawl, US officials said, issuing a downbeat estimate for this year's harvest too.

The South American country's soybean plantings will in 2015-16 drop by 300,000 hectares to 31.1m hectares, due to "the relative low global soybean prices, the economic challenges expected in Brazil, and higher interest rates", the US Department of Agriculture bureau in Brasilia said.

"These factors will put a damper… on aggressive land expansion for soybeans."

The bureau forecast a particular dent to area expansion in the north eastern Mapitoba region, comprising the states of Maranhao, Piaui, Tocatins and Bahia, where relatively low land prices have lured farmers to convert tropical savanna into arable land.

"Converting these areas to row-crop production… is estimated to cost $1,000-1,500 per hectare," the bureau said.

"Increasing costs of production this year will make farmers think twice about clearing new land for this upcoming planting season."

Harvest prospects

The bureau pegged at R$2,584 per hectare the cost to Brazilian farmers of producing soybeans in 2015-16, a 7% rise year on year.

However, with the extra money in part spent on better seed, production will rise despite the first drop in plantings since 2006-07, when sowings totalled 20.7m hectares.

"The continuing adoption for better seed genetics will help Brazil's production reach a new record," the bureau said in a report, estimating Brazil's harvest in 2015-16 at 94.0m tonnes.

On the bureau's estimates, that represents a 1m-tonne rise year on year, although other commentators have a higher estimate for Brazil's current crop, which is some two-thirds the way through being harvested.

The USDA itself sees the crop at 94.5m tonnes, while Agroconsult last week lifted its estimate by 1.1m tonnes to 95.8m tonnes, although Safras e Mercado two weeks ago cut its forecast by 600,000 tonnes to 94.4m tonnes.

The bureau highlighted "erratic weather patterns… throughout the growing season".

Farmers slow soy sales

The bureau was also more downbeat on Brazilian export prospects for 2014-15, on a February-to-January basis, pegging them at 46.0m tonnes, nearly 1.2m tonnes below the USDA's official forecast.

It cited some transport delays from last month's truckers' strike, and a reluctance by farmers to sell crops which represent a dollar-denominated hedge against a weakening real.

"Due to relative low global prices and expectations of a weaker real since October, farmers held the soybean crop longer than usual expecting better domestic prices," the report said.

"As a result, soybeans started reaching the Brazilian ports for exports later than expected."

Record exports ahead

However, "some of these [lost] exports will carry to the next marketing year," the bureau said, estimating Brazil's 2015-16 shipments at a record 48.0m tonnes.

"This forecast is based on strong demand, mainly by China, and the expected weak real through 2015 and 2016.

"The Chinese market is forecast to import record amounts as a result of its urbanisation, rising incomes, and modernisation of the feed and livestock sectors."


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