Sep 08, 2009
2009-10 South American Soy Crop 124 mt, 27.5 mt More Than 2008-09
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
South American farmers are poised to greatly increase their soybean production in 2009-10. Soybean acreage is expected to expand nearly one and two thirds million hectares (43.28 million hectares in 2008-09 vs. 44.93 million hectares in 2009-10) and yields are expected to return to more normal levels after the extremely dry growing season of 2008-09. Below is a breakdown by country for the 2009-10 soybean and corn crops.
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Brazil To Produce 62.5 mt Of Soybeans In 2009-10
Weather - Rainfall has returned to southern Brazil after a relatively dry 2008-09 growing season. In fact, there has been too much rain for the developing wheat in southern Brazil, but on the positive side, the rainfall has recharged the soil moisture. Temperatures in southern Brazil have been warm and seasonal for this time of year. In central Brazil there were some showers in Mato Grosso two weeks ago and again over the weekend. Temperatures in Mato Grosso are very hot (plus or minus 100 degrees) which is typical for this time of year. I would categorize the Brazilian weather as improving in southern Brazil and seasonal in central Brazil where the rainy season may start earlier than last year.
Field activity - In southern Brazil they just wrapped up the harvest of some of the late-planted safrinha corn crop. The winter wheat in southern Brazil is now flowering. Farmers are preparing for corn planting which will start any time now, in fact, a few fields may already be planted. Farmers are also preparing for soybean planting which will start in late September and early October. In Mato Grosso farmers are preparing for soybean planting, which will start on September 16th or whenever there is ample soil moisture after that date. By law, they cannot start planting soybeans until the 90-day soybean-free period ends on September 15th.
Crop estimates - Last year, Brazilian farmers planted 21.6 million hectares of soybeans, which ended up producing 57.5 million tons of soybeans. For the 2009-10 growing season, it is estimated that the Brazilian soybean acreage will increase 700,000 hectares to 22.3 million hectares, which represents an increase of 3.2%. The majority of the increase will come from switching out of full-season corn in southern Brazil into additional soybean acreage. There will probably be only limited expansion of soybean production into the new lands of central Brazil.
Domestic soybean prices are not that outstanding, but they are good enough to make some money growing soybeans in southern Brazil and they are certainly much better than the domestic corn prices. Last week, I reported that it would take a May 2010 CBOT price of US$ 10-11 to make a profit growing soybeans in central Mato Grosso. But, in southern Brazil, it is much cheaper to grow soybeans due to the reduced cost of transportation and in Parana for example, farmers can make money growing soybeans with a May 2010 CBOT price of US$ 8-9. Therefore, nearly all the new soybean acreage in Brazil will be the result of switching out of full-season corn production into soybeans.
The total 2009-10 Brazilian soybean production is expected to be approximately 62.5 million tons, which would represent an increase of five million tons over last year or an increase of 8.6%. The nationwide soybean yield is projected at 2810 kg/ha (40.7 bu/ac), which is certainly higher than last year's drought affected crop (2629 kg/ha or 38.1 bu/ac), but slightly lower than the type of yields recorded during good growing seasons.
There are several reasons why I plugged in a slightly lower yield. First, the soybean acreage increase will come mostly from southern Brazil and while the yields in Parana are comparable to Mato Grosso, the yields in Rio Grande do Sul and Santa Catarina are generally lower than in Mato Grosso. The other reason why I choose a slightly lower yield is due to the fact that I think Brazilian farmers will continue to be conservative in their fertilizer applications which would make it two years in a row of reduced fertilizer application, thus holding down the yield potential.
The Brazilian corn acreage is expected to fall 600,000 hectares to 13.5 million hectares. Nearly all the declines will occur in southern Brazil where depressed corn prices are pushing farmers to switch some of the full-season corn acres into additional soybean production. The total Brazilian corn production is estimated at 53.0 million tons, which would represent 3 million tons more than last year. The 2009-10 nationwide corn yield is estimated at 3,925 kg/ha or 60.5 bu/ac, which is an improvement over the drought reduced 2008-09 corn yield of 3,532 kg/ha or 54.4 bu/ac.