Mar 01, 2010
Abiove Estimates 2009-10 Brazilian Soybean Production At 65.5 Million Tons
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The president of Abiove (the association of vegetable oil processors in Brazil) Carlo Lovatelli estimates that the 2009-10 Brazilian soybean production will be 65.5 million tons. If realized, this would be less than the 66.7 million tons currently being estimated by the Ministry of Agriculture. He feels the top end yield of the crop was limited somewhat by regional dryness earlier in November, increased disease pressures due to excessive rainfall, and too much rain during the early harvest in Parana, Mato Grosso and Mato Grosso do Sul. Nevertheless, a 65.5 million ton crop would be a record production, far surpassing the 57.1 million tons produced in 2008-09.
Abiove estimates that the Brazilian soybean acreage increased 6.7% in 2009-10 and that approximately 20-22% of the Brazilian soybean crop has been harvested.
According to Lovatelli, the current soybean prices are OK given the large U.S. production in 2009 and the potentially record crops in both Brazil and Argentina in 2009-10. He feels the key to maintaining the current price levels will be the demand for soybeans from China. China imported 42.5 million tons of soybeans in 2009 compared to 38 million tons in 2008. China is the largest purchaser of Brazilian soybeans, whereas European countries are the largest buyers of Brazilian soybean meal. Even though the European countries continue to recover from the worldwide financial downturn, their purchases of Brazilian soybean meal have remained relatively stable.
If soybean prices would fall, the biggest impact would be on the soybean producers in Mato Grosso, Brazil's largest soybean producing state. Current price levels are at the break even point especially for producers in the northern part of the state where transportation costs and the lack of an adequate infrastructure to handle the crop makes it the most expensive region in Brazil to grow soybeans. If producers in Mato Grosso have sub-par yields they will loose money this year. If they have above average yields, they will probably make a little money on their 2009-10-soybean crop. If soybean prices decline, then it is going to be hard for any producer in Mato Grosso to make any money.
Abiove is anticipating that 2010 could be a good year for its member firms due to the record large crop, high demand for soybeans and soybean meal, and stable prices. Abiove is estimating that Brazil will export 27.1 million tons of soybeans and 12.3 million tons of soybean meal in 2010.