March 2, 2011

Farmers in Western Bahia Increase Cotton Acreage 48%

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

Record cotton prices convinced farmers in western Bahia to increase their 2010/11 cotton acreage 48%. During the 2010/11 growing season, farmers in Bahia planted 362,000 hectares of cotton, which is 117,800 more than what they planted during the 2009/10 growing season. Most of the increased cotton acreage came from fallow land being brought back into production, but some of it also came at the expense of full season corn acreage, which fell 10% in Bahia in 2010/11. Full season corn acreage in Bahia is estimated at 153,000 hectares while soybean acreage is estimated at 1,060,000 hectares.

In addition to the strong prices being offered for cotton and soybeans, farmers in Bahia also opted to increase their acreage of crops such as cotton and soybeans during the regular growing season leaving some of their corn production to be grown during the dry season. The planting of both cotton and soybeans are prohibited during the dry season in an attempt to impede the spread of diseases and pests. Corn has no such restrictions, so some farmers have opted to grow their corn under irrigation during the dry season. It is estimated that approximately 15,000 hectares of corn will be grown in Bahia under irrigation after the soybeans are harvested.

Similar to the way strong cotton prices stimulated cotton acreage in Bahia, strong corn prices in the state of Piaui have also stimulated increased corn acreage as well. Over the last decade or so, farmers have been moving into southern Piaui to take advantage of low land prices to increase their soybean production. Most farmers have only been planting soybeans because they felt the land was too infertile to support corn production and there was not enough of a premium being paid for corn to justify switching out of soybeans. Recent research however has shown that with the right levels of fertilizer applications, corn production is quite acceptable in the region. Farmers also realized that corn could also be used as a rotation to continuous soybeans.

The deficit of corn production in region has also led to strong corn prices in the local market. The local demand for corn is very strong and as a result, there is a significant premium being paid for corn (R$ 10 per sack or approximately US$ 2.70 per bushel). A sack of corn that sells for R$ 23 in Parana is selling for R$ 32 in southern Piaui. After losing acreage to cotton in western Bahia this growing season, corn acreage is expected to rebound in 2011/12.