South America Calling

Agroconsult Pegs Brazil's 2013-14 Soy Crop at 88.3 MMT

Brazil's soybean planted area will rise 6% to 72.4 million acres as farmers forge ahead with plans to expand into new areas despite tighter margins this season, according to Agroconsult. (DTN file photo by Alastair Stewart)

SAO PAULO, Brazil (DTN) -- Brazil's soybean production will jump 7.7% to 88.4 million metric tons (3.25 billion bushels) in the coming 2013-14 season on the back of further expansion in the frontier regions, according to Agroconsult, a respected local analytics firm.

Agroconsult's number is considerably higher than the U.S. Department of Agriculture forecast of 85 mmt and at the top end of private forecasts that range from 85 mmt to 89 mmt.

Soybean planted area will rise 6% to 72.4 million acres as farmers forge ahead with plans to expand into new areas despite tighter margins this season, Andre Pessoa, Agroconsult director, told journalists.

Lower prices in the second quarter, when planting decisions were made, and spiraling logistics costs in the Cerrado regions made soybean farming look the least attractive in three years.

But producers decided to follow through with long-term plans to plant soy on pasture land in Mato Grosso, Goias, Bahia and elsewhere in the Cerrado or onto newly cleared land in the new frontiers of Maranhao, Piaui or Tocantins.

A continued trend of switching from corn to soy as a summer crop in established grain regions, instead planting the cereal as a second crop, also boosted area for the oilseed.

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Since those decisions were made, the soy outlook has actually improved with projected net margin outlooks going from negative to positive.

The recent upturn in soybean futures has dovetailed with a dramatic slide of the Brazilian real to considerably bolster local prices

The Brazilian real has lost 15% against the dollar since May 1, and the price of beans in Sorriso, Mato Grosso, has risen 16% to R$57 per 60-kilogram bag ($10.80 per bushel).

That has prompted a spurt of forward selling of the next soybean crop.

As a result, some 40% to 50% of the upcoming soybean crop now has been sold, which although still down on the 60% registered at the same point last year, is up about 10 percentage points from the month before, said Pessoa.

With nearly all crop inputs bought before May, the local currency's slide will not have a major impact on planting costs, said Pessoa.

"The only costs that will be affected for this year are chemicals ... The bigger question is what the costs for 2014-15 look like," he added.

Operational profit in Sorriso, Mato Grosso, will be R$85 per hectare ($14.33 per acre) in 2013-14 -- based on average yields of 45 bushels per acre -- down from R$330 per hectare ($55.67 per acre) last year.

The impact of Brazil's poor logistics can be seen when comparing the Mato Grosso margins to those in Parana, where fields are relatively close to ports and have good road links. For example, farmers in Londrina, Parana, can expect operational profits of R$477 per hectare ($80.47 per acre) next season, based on average yields of 50 bushels per acre, down from R$938 per hectare ($158.23 per acre) last year, Agroconsult projects.

Logistics will eat up 27% of the free-on-board price for soybeans at port next season for soybeans coming from Sorriso and surrounds, said Agroconsult.

Alastair Stewart can be reached at alastair.stewart@telventdtn.com

(AG)

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