SAO PAULO, Brazil (Reuters) — Brazil will likely harvest a record soybean crop in 2013-14 if the climate remains favourable, but high costs could chip away at farmers’ profits.
Glauber Silveira, head of the national soy co-operative, believes that the U.S. Department of Agriculture’s 88 million tonne forecast is slightly exaggerated.
He said Brazil’s crop may be closer to 86 million tonnes, which would still be a record.
Brazil is planting its largest area ever with soybeans, but Silveira said many of the new fields are old cattle pastures that take a few years and lots of investment to return to shape
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“The crops look very good, but they were planted quite early, which can affect productivity a bit,” Silveira said.
“They also run a big risk at harvest, if it’s a rainy year.”
Rain is vital when soybean plants are developing but can hurt quality when crops are mature. Brazil’s soybean crop is 50 percent planted, outpacing last year and the five-year average.
However, production costs rose sharply in 2013-14 from a year earlier, when soy prices rose to record highs after drought hurt production in the United States.
Soy rose to $18 per bushel in 2012 compared with the current $12.60 per bu. in Chicago.
“It’s always the same problem,” Silveira said.
“The price of soy rises and companies raise prices of inputs…. Then soy prices fall and costs remain the same.”
A stronger dollar against the Brazilian real has also made imported seeds, fertilizers and pesticides more expensive, although it will likely favour exports of Brazilian crops. Freight costs have also risen.
“The total costs are an average ($423 per acre),” he said.
“With soy at ($20) per sack, we need (20.7) sacks (per acre) to break even; (20) bags per (acre) is a loss.”
