August 21, 2012

Farmers in Mato Grosso Reduce Rice in Favor of Additional Soy

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Producers in Mato Grosso are expected to increase their soybean acreage in 2012/13 between 800,000 and 1,000,000 hectares. While most of increase will be the result of the conversion of pastureland into additional soybean production, a significant portion of the increase will be the result of reduced acreage of dryland rice as well as cotton.

Farmers in Mato Grosso continue to reduce their dryland rice acreage in favor of more soybeans in spite of improving rice prices. The 2011/12 rice acreage in the state was 35% less than in 2010/11 and now the 2012/13 is expected to decline even further.

According to Conab, in 2011/12 the rice acreage in the state declined 37% from 256,000 hectares in 2010/11 to 161,000 hectares in 2011/12. While the rice yields improved somewhat in 2011/12, the total production only came in at 514,600 tons, which was significantly below the 795,900 tons produced in 2010/11.

Rice acreage in the state is expected to decline even further in 2012/13 due to the superior price being paid for soybeans. Even though rice prices in the state have increased approximately 70% compared to a year earlier, it hasn't been enough to compete with soybeans. In August of 2011, rice was selling for R$ 25 per sack of 60 kilograms and currently it is selling for R$ 43 per sack. Current prices of soybeans in the state are in the range of R$ 70 per sack.

Industries in the state have already started to import rice from Rio Grande do Sul to meet the domestic demand in the state. As a result of the tight supplies, consumers in the state have seen rice prices increase 28% in just the last two weeks and prices are expected to continue moving higher. Rice prices in the state had already increased 35 to 40% since February and they are expected to increase 10% to 15% more by the end of the year.