Fort Dodge Messenger, IA
01-27-08
Soybeans looking good in Brazil
Crop expected to impact U.S. grain prices
By KRISTIN DANLEY-GREINER, Messenger correspondent
AMES — If Brazil and Argentina’s soybean production estimates pan out, it could
have a definite impact on the anticipated upside potential for soybean prices.
Bob Wisner, grain economist at Iowa State University, said the U.S.
Department of Agriculture projects Brazil’s crop to be an estimated 2 percent
larger than last year, as well as a 5 percent increase coming out of Argentina.
“Crop conditions are reported to be very good at this time, although some areas
of Argentina are getting slightly dry,”î Wisner said. “Some private forecasters are
raising their Brazil estimates a little above those of the USDA.î”
Potentially negative factors that could impact these two regions’ crops would be
too much or too little rain.
“But so far, that hasn’t been a serious concern,î” Wisner said. “Too much rain
could interfere with spraying for Asian rust.î”
Phil Corzine, general manager of South American Soy, said that the soybean
crop in nearly all major growing areas of Brazil are doing great.î
“Rains have came pretty much when needed, and hot sunny days are rarely in
short supply there in Brazil. On the basis of looks alone — a person might be
tempted to predict a record soybean crop for Brazil,”î Corzine said. “Even though
the crop is looking great, what we don’t know is how many farmers cut back on
their use of fertilizer and lime and other inputs, due to the low prices that have
been plaguing the country. A strong real drove domestic soybean prices to rock
bottom levels — less than half of what we saw just a couple of years ago. Most of
Brazil’s soy is exported and sold on the world market in dollars.
“When those dollars area taken back to Brazil, the strong real translates into less
reals per bushel. So, we know that a lot of farmers there in Brazil cut their crop
budgets either to have a chance of producing a profitable crop with lower prices,
or simply due to the fact that they were already in debt so far that banks, input
suppliers or grain buyers wouldn’t loan them enough money to plant using a full
set of inputs,î” Corzine continued. “Brazil’s soils aren’t like ours here in Illinois
and Iowa, as they need lots of fertilizer and lime, so cuts in those products will
surely lower the maximum achievable yields, even with the great weather we
have been experiencing.î”
But if Brazil or Argentina reaps bigger crops as anticipated, it likely will negatively
impact the markets for the U.S.
“It may temper the upside potential in soybean prices some in late winter and
spring,î” Wisner said.
Darrel Good, ag economist with the University of Illinois, said prospects are for a
record harvest in Brazil, even with a slight reduction in acreage. With imperfect
weather conditions and soybean rust to battle, there are no indications of
significant problems there, he added.
“Large crops there, along with an increase in production in Argentina, will partially
offset the anticipated reduction in acreage in the U.S. in 2007. Additional
increases can be expected in South America in 2008,Ӕ Good said
Corzine said the Brazilian government believes that farmers there actually
planted 7 percent fewer soybeans this year than last year, due to poor prices.
The government also believes that even with fewer acres, higher yields will
increase by 2.7 percent from the previous crop to 54.874 million metric tons.
In any case, it’s likely that Brazil’s good crop news will be drowned outî by the
upcoming spring corn and soybean acreage situation in the U.S., Corzine said.