Is the expansion slowing, or will this season be seen as just a hiccup in Brazil's continued soybean growth?
Since the 2000-2001 crop, Brazil's soy-planted area expanded at double-digit rates. This year, however, some analysts think the increase in Brazilian production will be modest or even flat.
As Brazilian farmers enter the new year, their beans are already planted. In fact, some of the earliest planters of early beans in the state of Mato Grosso got their first harvest underway shortly after Christmas.
After the drop in soybean prices with China's complaints of fungicide-treated beans last year, though, there is less optimism in the fields than before.
Bean prices have dropped and so has the dollar, losing 15% of its value against the Brazilian currency in the past 10 months. That means crops like soybeans, whose priced is dollar based, bring in even less money to producers.
And inputs prices have climbed. In some cases, they've soared. Some producers say their fertilizer costs rose 38% over last season's costs.
This situation, according to Globo Rural magazine, may have lead to a small drop in total fertilizer sales in 2004. At the same time, producers are dealing with Asian soybean rust in 10 Brazilian states so far, scouting fields and applying fungicides preventatively.
Faced with the prospect of tighter margins between production costs and sales prices, some farmers here have told us land prices are going down.
There is currently no single barometer of Brazilian agricultural land values nationwide, but two soybean producers in the south agree that they dropped at least 10% from their values in August 2004.
Severe drought in Brazil's south is darkening the picture further. Eroni Paniz, a soybean farmer from Santa Maria, Rio Grande do Sul, says he and neighbors are seeing tremendous losses in their corn, rice and dry bean crops. So far, “Soybeans are surviving, but we're just not getting rain — and the great question my neighbors are asking is whether to plant rice, wheat and other crops after the soybean harvest, if this situation goes on,” Paniz says.
The weather has been more cooperative moving north toward the expansion areas of Bahia, Mato Grosso and Tocantins, where producer Silvio Antonio says he is planning on two applications for rust this season.
“We will apply a preventative application, but also have purchased fungicide in case we get rust anyway,” he says. “The key is scouting the fields every other day. At least we have been getting the right mix of sun and rain.”
Farmer Edson Ponte, of Londrina, Parana, sighs in relief after a few days of steady rainfall. “Our corn is coming up beautifully, and right now it is the only crop to show some reaction in price,” Ponte says. “It's a pity this happens because of the dry spell and projected corn harvest losses in the south.”
In all soybean-producing regions of the nation, nevertheless, producers are all concerned with the Catch-22 situation of prices well below breakeven levels and little or non-existent storage space to try and wait for better days.
Considering the continental size of Brazil, we may see different solutions to this paradox in different regions. But if it turns out to be a mere hiccup, farmers in the south will be happy.