|
|
|
|
|
|
October 16, 2001
The 2001/02 summer planting
season is getting underway in Brazil. Currency
and commodity market conditions heavily favor soybean cultivation.Competitor crops of corn and cotton are forecast to suffer significant
declines in sown acreage and production as a result of growers surging interest
in soybeans (see graph 1).
Last year at this time, farmers were planting record areas to each of the
primary summer crops of soybeans, corn, and cotton. Ideal weather conditions across the country resulted in record yield and
production for them all. Most importantly, corn production in 2000/01 increased
roughly 10.0 million tons, swamping the domestic market and significantly
driving down prices. Brazil
typically requires substantial corn imports to satisfy domestic demand in the
hog and poultry industries. However,
last year Brazil produced a record 3.0-million-ton-exportable surplus. In addition, record cotton production in 2000/01 reduced the
country’s need for imports by 61 percent compared to 1999/00, while record
soybean production lead to record bean exports.
Soybean exports in 2000/01 rose more than 34 percent compared to 1999/00 (see
graph 2).
Current economic conditions favor a shift in
summer crop acreage to soybeans.
The
recent devaluation of Brazil’s Real (1 U.S.$=2.9 Reals), and slowing global
growth have reduced capital flows to the South American region. The Real has depreciated about 30 percent versus the US dollar since
October 2000, significantly enhancing the relative value of exported soybeans
versus competitor crops destined for the domestic market.
At the same time, domestic corn and international cotton prices have
fallen from last year’s levels, while the cost of imported inputs has risen. Corn and cotton cultivation requires substantially higher inputs than do
soybeans; thus, their cost of production has risen disproportionately this year. Soybean growers have liquidity in U.S. dollars from last year’s record
harvest, and have access to highly favorable financing terms from the Government
of Brazil. Corn and cotton
producers do not have similar liquidity this season or access to low-cost
Government support and loans.
Early season planting operations are
progressing in Brazil’s Center West region, following beneficial showers in
September. All reporting and survey from Brazil indicate that farmers are poised
to sow a record acreage this season. An
August national planting intentions survey, published by Safras &
Mercado, indicated that total crop acreage in Brazil would rise by
approximately 1 percent, while soybean acreage was forecast to increase by about
9 percent. Meanwhile, a Safras
& Mercado survey of farm input suppliers indicated that net consumption
of imported crop inputs would likely fall this year owing to the depreciation of
the real, after having risen substantially last year (see graph 3). It is
apparent that the increased profit margin obtainable from growing soybeans this
year will encourage farmers to apply optimum levels of inputs on a substantially
increased national acreage. Therefore,
soybean’s proportion of total input consumption will rise and crop yield are
expected to remain near record levels.
Given these underlying conditions, USDA expects that the diversion of land away from corn and cotton production in 2001/02 will be both widespread and substantial across Brazil. A significant amount of this swing acreage is forecast to shift from corn to soy in the traditional southern growing areas of Rio Grande do Sul, Parana, and Santa Catarina. The primary shift from cotton cultivation to soybeans, however, is expected to be focused in the state of Matto Grosso, with smaller reductions elsewhere. Matto Grosso farmers have signaled that they may reduce cotton acreage by up to 25 percent. In addition, the enhanced profitability of soybeans this year is expected to spur new land conversion and the growth in soybean cultivation in the frontier regions of the center-west, north, and northeastern states. This is part of a longer historical pattern of expansion in soybean cultivation outside the traditional southern states that is expected to continue (see graph 4). USDA currently forecasts 2001/02 soybean area at a record 15.5 million hectares, up 0.5 million from last month and up 1.5 million or 11 percent from last year. These robust pre-season estimates for planted area are bolstering the likelihood that a third consecutive record harvest will be achieved, with substantial increases in output in every region. Brazil’s 2001/02 soybean crop is currently estimated at a record 41.5 million tons, up 2.5 million from last month and up 3.1 million or 8 percent from last year’s bumper harvest (see graph 5).
For more information, contact Michael
Shean of the the Production Estimates
and Crop Assessment Division on (202) 720-7366
|
|
 |
|
| | Contact PECAD | FAS Home | USDA | | |
