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January 8, 2010

Conab Increases Brazil Soybean Estimate To 65.1 Million Tons

With the 2009-10 soybean planting complete in Brazil, Conab now estimates that 23.06 million hectares (57.6 million acres) have been planted, which is 6% more (1.32 million hectares) than the 21.74 million hectares (54.3 million acres) planted in 2008-09. While this is a sizable increase, it does not surpass the record soybean acreage in Brazil of 23.3 million hectares (58.2 million acres), which was set in 2004-05. The state of Parana registered the greatest increase in soybean acreage with 313,000 additional hectares (7,7%) followed by Mato Grosso with an increase of 311,000 hectares (5.3%), Goias with an increase of 161,000 hectares (7.0%), and Rio Grande do Sul with an increase of 159,000 hectares (4.2%).

The total soybean production is now estimated at 65.16 million tons, which is 14% greater (7.99 million tons) than last year'ss crop of 57.17 million tons. Mato Grosso is expected to produce 18.6 million tons (28.6% of the total) followed by Parana at 13.2 million tons (20.3% of the total) and Rio Grande do Sul at 8.7 million tons (13.3% of the total).

The nationwide soybean yield is estimated at 2,825 kg/ha (41 bu/ac), which is 7.5% higher than the 2,629 kg/ha (38.1 bu/ac) registered last year. Of the major soybean producing state, the statewide yield in Mato Grosso is estimated at 3,038 kg/ha (44 bu/ac), Parana's yield is 3,030 kg/ha (43.9 bu/ac), Rio Grande do Sul's yield is 2,200 kg/ha (31.9 bu/ac), and Goias's yield is 2,970 kg/ha (43 bu/ac).

The principal reasons for the increase in soybean acreage was a lower cost of growing soybeans and greater liquidity for soybeans as compared to corn. At the time the farmers were making their planting plans for the 2009-10 growing season, the price of corn in Brazil was below the cost of production and when that happens, the best alternative is to sell the corn to the government at a guaranteed minimum price. Brazilian farmers do not like to do that because it is a slow and cumbersome process and the payments from the government are often delayed. In order to avoid the hassle of selling their corn to the government, many farmers opted to decrease their corn acreage and increase their soybean acreage.