June 15, 2015

2015/16 Mato Grosso Soybean Expansion Estimated at 1.8%

Soybean farmers in Mato Grosso, which is the largest soybean producing state in Brazil, are expected to increase their soybean acreage in 2015/16 by the smallest amount in the last six years. According to the latest estimates from the Mato Grosso Institute of Agricultural Economics (Imea), the soybean acreage in the state is expected to increase 1.8% in 2015/16 and the production is expected to increase 1.7%.

Soybean farmers in the state are being cautious in their expansion plans due to low commodity prices, higher cost of production, higher interest rates on their production loans, and the general economic uncertainty in Brazil.

The soybean acreage in the state is expected to increase 163,000 hectares to a new record high of 9.1 million hectares. If realized, this would represent only about 1/3 of the 6% increase registered in 2014/15. Most of the increase would come from the continued conversion of degraded pastures to row crop production especially in northeastern and northern Mato Grosso.

Most of the farmers in the state have not yet purchased their inputs for the next crop so it is uncertain the level of technology that will be used for the new crop. Input purchases have been slowed by the delayed announcement of the new 2015/16 Harvest Plan in Brazil. Even though the funding for the new Harvest Plan was increased by 20% over the previous year, about half of the increase will be eaten up by inflation estimated at 9% and the other half will be eaten up by the increased cost of production which is estimated at 10%. Production loans from the new Harvest Plan also have much higher interest rates compared to last year, which are making farmers even more cautious.

As a result of the uncertainties surrounding the level of inputs that will be dedicated to the next crop, Imea is maintained the same soybean yield estimate as the 2014/15 crop at 51.9 sacks per hectare (3,114 kg/ha or 45.1 bu/ac).

A similar pattern of expansion is expected to unfold across the rest of Brazil as well and the 2015/16 soybean acreage nationwide is expected to increase 1-2-3%.