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Welcome to the Southern View blog featuring fresh information about grains and cotton production in Brazil, along with information about Argentina's and Paraguay's crops.

A Large Soybean Seeding for Sure…

Oct 20, 2009

There are many crops we hear Brazil must increase, such as beans, to supply world demand. For many crops there was an expectation to reach the record 60mtm – or more – but for many reasons it didn’t happens.
 
In 2010, we have a great chance to fill the expectative. Not because the market value would pay a profitable margin, but because there is no other better choice!
 
Last corn big crop elevated stocks over the storage capability, and early rains surprised many producers with corn outdoors. A selling rally dropped prices to an unsatisfactory level. As carryover stills high, it’s not a good choice for now and corn will give room for a lots of soybean hectares. 
 
With R$ valuating, cotton is not attractive as an export product, as well local mils can’t be competitive with this strong currency. Although input costs has really decreased, this is considered a high risk culture in an El Nino year, and all uncertain around the end of crisis.
 
The soybean prices seen to be not so threatened by R$ x U$ relation. Historically, in the South America crop period, CBOT gets a straight relation to R$, compensating the currency loses.  As well internal demand is very strong, and if CBOT goes down, a positive basis may catch up. 
 
Anyway, it’s not sure for positive margins as the same problem occurred with corn may happens as the storage structure is not adequate for current grain crop, worst will be for a record one.
 
… A record crop, maybe.
Although a record area will be covered with soybean, it’s too early to say a record volume will be harvested.  There are some threats to a record harvest:
 
Credit: Private credit shrinks 70% since traders and crushers lost international credit line with the crisis. Rigorous rules keep many producers away from this usual tool of crop financing. The official lines never comes in time, and Banco do Brasil  - the official credit liner, have a long  time, sees this kind of loan as prejudicial for  balance sheet, and it’s also setting rough rules to the producers. 
 
With low credit, producers will have to put own money in the fields. Those who got some good profit last harvest, fears to lose it for weather and price risk.  This situation may reduce the fertilizers and defensives, so the yields. Currently ANDA (www.anda.org.br) reports a fertilizer delivery on 22, 4% down comparing to last season.  May be just buyers postponing purchasing while prices comes down. As weel may be a sign of less investment in the field.
 
Weather: Climate is a mystery this season. For the first time in many years we saw showers in July and August in Mato Grosso. Usually El Nino brings good rains in southern estates, but this year things are beginning different. Also it’s seems to be a high moisture year, and if producers doesn’t invest in defensives, rust may be a serious threat.
 
Many regions stills in the definition window and producers keep a sharp eye at CBOT.
 
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Have a specific question about soybean production in Brazil? E-mail Eder at eder@weisul.com.br.
 
 
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COMMENTS (3 Comments)

Mik
Is there any progress on fertilizer purchasing so far?
6:48 AM Nov 5th
 
Anonymous
dude, figure out how to write Portuguese then criticize
1:56 PM Oct 21st
 
 
 
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