Brazil’s expansion of soy plantings this year may be the lowest in a decade, according to a South American grains analyst.
But it’s not because of La Nina. Instead, loads of debt is holding back farmers from getting new loans. Weather woes that devastated Brazil’s last harvest, plus a struggling economy and low commodity prices, have left debt-ridden farmers there unable to get credit, explained Michael Cordonnier, president of Soybean and Corn Advisor.
Even though Brazil’s soy plantings will be slowed down this year, it still is forecast to rise 2% to 101 M. But that compares with plantings expansion of 3.5% last year and 8% the year before, Cordonnier says.
“So the same guys that need to expand this year - a lot of them have not paid off their loans from last year on their forward contracts with the grain companies,” he noted during a webinar by the marketing firm Allendale. "They are having to renegotiate their old loans, and they are not eligible for credit availability this year."
The credit crunch has led some of Brazil’s large agribusiness firms to file for reorganization under bankruptcy proceedings, Cordonnier says. It also has reportedly attracted recent new investment in Brazil’s commercial agricultural firms by U.S. investment firms, including Blackrock, he says.
An estimated 25% of Brazil’s new crop soybeans have been planted under mostly favorable weather conditions.