Jul 29, 2010
Soybeans Could Replace Some Full Season Corn in Southern Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The Agriculture Confederation of Brazil (CNA) anticipates that farmers in southern Brazil will once again opt to reduce their full season corn acreage in favor of increased soybean acreage for the 2010/11 growing season. During the 2009/10 growing season, farmers in southern Brazil reduced their full season corn acreage by 20% while at the same time they increased their soybean acreage by 7.8%. In southern Brazil, soybeans and full season corn compete for the same acreage since they are planted at the same time.
The reason for the switch is expected to be the better anticipated returns for soybeans compared to corn. While domestic soybean prices in Brazil are not outstanding, the domestic prices for corn are very low and in many locations, below the cost of production. Even though the full season corn acreage declined last year in Brazil, the growing season was good and corn yields were very high. As a result, the silos are full of corn and the domestic market has a glut of corn.
Anticipated soybean acreage is also expected to increase slightly in the Center-West region of Brazil as well, but not because of a reduction in corn acreage. Full season corn and soybeans do not compete for the same acreage in the Center-West Region of Brazil because nearly all the corn is planted as a second crop after the soybeans have been harvested. The small increase is expected due to reduced cost of producing soybeans. CAN estimates that the cost of growing soybeans in central Brazil will decline by 10% to 15% due to reduced cost of inputs especially fertilizers. This is very important for soybean producers in central Brazil because fertilizers account for the largest share of input costs.
The cotton acreage in Brazil is also expected to increase in 2010/11, but the total cotton acreage in Brazil is approximately 3% to 4% as large as the soybean acreage. Cotton and soybeans do compete for the same acreage in Mato Grosso, which is the main cotton growing state in Brazil, but a large increase in cotton acreage would result in only a minor reduction in potential soybean acreage.