It has been expected that Brazilian soybean acreage would increase something around 2.5%, reports Eder Silveira, market analyst with Weisul Agricola, with five locations in Brazil. "But that figure was based on research concluded when Chicago futures were hitting $15.50/bu. Now, it is more likely to be a 2% increase, but it definitely doesn't mean higher production.
"For corn, earlier expectations were for around 4% more area (including both first crop and double-cropped),” says Silveira. "But as local prices are dropping and fertilizer prices are getting more expensive—and we now see crude furutres up 4%—I would not be surprised to hear area is dropping in some regions, as major farms have not yet concluded input purchases.”
Crop intentions research indicates cotton will decrease around 7%, and prices are worst now, he adds.
Silviera points to short supplies of private credit for medium and big growers, and high price risk discouraging smaller growers who could take advantage of government's credit. "These nonprofessionalized producers have no access to hedging tools. It's known that only 7% of the next crop was priced by Aug. 15, compared with 30% historically.”