Oilseeds and Products Update

An Expert's View about Agriculture and Animal Husbandry in Brazil

Posted on: 31 Oct 2011

Post now forecasts soybean production in 2011/12 at 75 million metric tons (mmt), a slight decrease from the record 75.3 mmt produced in 2010/11.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 10/5/2011 GAIN Report Number: BR0717 Brazil Oilseeds and Products Update 2011/12 Soybean Planted Area Estimated to reach a Record 25 Million Hectares Approved By: Bob Hoff, Agricultural Counselor Prepared By: Jeff Zimmerman, Agricultural Attaché Report Highlights: Post now forecasts soybean production in 2011/12 at 75 million metric tons (mmt), a slight decrease from the record 75.3 mmt produced in 2010/11. Post forecasts a record 25 million hectares will be planted to soybeans in 2011/12, a 3 percent increase over 2010/11 planted area of 24.2 million hectares. The 2011/12 soybean crop has just commenced planting with over 5 percent planting concluded in the highest and second highest producing states of Mato Grosso and Parana. Producers are heavily investing windfall 2010/11 profits in increased use of certified seed, genetically engineered seed, fertilizer, new machinery, soil management and other inputs. Post anticipates these investments to result in very good national yields of 3 metric tons per hectare (mt/ha), despite expanded first-year planted acreage that is expected to yield less than the average. Soybeans maintain a lower relative production cost and greater liquidity compared to alternative crops. Exports in 2011/12 are expected to remain strong and are estimated at 34 mmt, up 4.6 percent from an estimated 32.5 mmt of exports in 2010/11. Brazil?s current 5 percent biodiesel blend mandate is anticipated to increase to 7 percent late 2012 or early 2013. Table 1. Production, Supply, and Demand Statistics Oilseed, Soybean 2009/2010 2010/2011 2011/2012 (Local) Brazil Market Year Begin: Feb Market Year Begin: Feb Market Year Begin: Feb 2010 2011 2012 USDA SDA USDA O New U Post fficial O New Post fficial O New Postfficial Area Planted 23,500 23,400 24,200 24,200 25,000 25,000 Area Harvested 23,500 23,400 24,200 24,200 25,000 25,000 Beginning Stocks 1,656 295 2,766 1,779 6,511 5,004 Production 69,000 68,700 75,500 75,300 73,500 75,000 MY Imports 150 124 25 25 50 25 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 70,806 69,119 78,291 77,104 80,061 80,029 MY Exports 29,190 29,190 31,930 32,500 35,100 34,000 MY Exp. to EU 9,500 6,000 10,000 10,000 10,000 10,000 Crush 35,700 35,200 36,500 36,500 36,525 36,700 Food Use Dom. Cons. 0 0 0 0 0 0 Feed Waste Dom. 3,150 2,950 3,350 3,100 3,450 3,200 Cons. Total Dom. Cons. 38,850 38,150 39,850 39,600 39,975 39,900 Ending Stocks 2,766 1,779 6,511 5,004 4,986 6,129 Total Distribution 70,806 69,119 78,291 77,104 80,061 80,029 1000 HA, 1000 MT Brazil?s 2011/12 Soybean Planted Area Estimated to reach a Record 25 Million Hectares Post raised 2011/12 estimated soybean production to 75 mmt, down slightly from the record 75.3 mmt in 2010/11. Post?s 2011/12 production forecast is similar to those of private consulting groups Agroconsult, Céleres, and Safras e Mercado that estimate 74 mmt, 75.18 mmt, and 75.24 mmt, respectively. Post raised 2011/12 forecast planted area to 25 million hectares, a 3 percent increase over 2010/11 planted area of 24.2 million hectares. Post?s 2011/12 estimated planted area is in line with those of Agroconsult and Céleres, both with 25 million hectares estimated. Post forecasts a 2011/12 national average yield of 3 mt/ha slightly lower than the 2010/11 record national average yield of 3.1 mt/ha. The Brazilian Ministry of Agriculture?s Food Supply Company (CONAB) will release its first 2011/12 crop survey on October 6th. Planting of the 2011/12 soybean crop has just commenced following the ?vazio sanitario? with over 5 percent planting concluded in the highest and second highest producing states of Mato Grosso and Parana. Since 2006, the majority of soybean producing states in Brazil have utilized a ?vazio sanitario? ? a 60- to 90-day period in which planting is prohibited to control soybean rust, with the exception of seed research and development (Table 2). Producers are heavily investing windfall 2010/11 profits in increased use of certified seed, genetically engineered seed, fertilizer, new machinery, soil management and other inputs. Post anticipates these investments to result in very good national yields of 3 mt/ha, despite expanded first-year planted acreage that is expected to yield less than the average. As with last year, the La Nina weather phenomenon is expected this year and yields will be predicated on the proper distribution of rainfall. Despite receiving lower than average rainfall in the South region of Brazil last year as a result of La Nina, this region had record yields due to ideal distribution of the rainfall. The biotechnology adoption rate for soybeans planted in 2011/12 is expected to reach 85 percent. Soybeans maintain a lower relative production cost and greater liquidity compared to alternative crops. Post travels to the highest producing state of Mato Grosso in September revealed significant investment in more comprehensive pre-planting soil management to bring the Ph level and nutrient load to ideal levels in older cropland areas. Land value appreciation over the past year has made land purchase and leasing less attractive with a significant number of producers opting to invest windfall profits back into their current land holdings. Production forecasts continue to outpace transportation and infrastructure improvements. The recent resignation of the Minister of Transportation has delayed by up to one year the estimated dates of completion of major transportation projects across the country. The Interstate Highway BR-163 is now scheduled to be completed by early 2013. The BR-163 will link the center north of Mato Grosso, including Brazil?s highest concentrated soybean producing region of Sorriso, to the Port of Santarem in the State of Para and result in an estimated transportation cost savings of $30 per ton. Table 2. ?Vazio Sanitario? Prohibited Soybean Planting Period by Brazilian State State (Production Rank) Start Date End Date Mato Grosso June 15th September 15th Paraná June 15th September 15th Rio Grande do Sul N/A N/A Goiás July 1st September 30th Mato Grosso do Sul July 1st September 30th Bahia August 15th October 15th Minas Gerais July 1st September 30th São Paulo July 1st September 30th Maranhão August 15th October 15th Santa Catarina N/A N/A Tocantins July 1st September 30th Piauí N/A N/A Roraima June 15th September 15th Pará 1 (East Region) July 15th September 15th Pará 2 (West Region) October 1st November 30th Federal District July 1st September 30th Brazil?s Committed Export Sales Extend into early 2012 on Price Competitiveness The Brazilian real depreciated nearly 20 percent vis-à-vis the U.S. dollar over the last month boosting exports sales of soybeans for delivery in December through March 2012, an export window historically favoring U.S. soybeans based on price competitiveness. Safras e Mercado Consultancy estimates 22 percent of the 2011/12 soybean crop are already sold, trending well above the 18 percent of the crop sold at this time last year and the 15 percent committed at this time on average in the last five years. The state of Mato Grosso leads with committed sales around 40 percent for the 2011/12 crop. Post estimates 2011/12 exports to reach 34,000 mmt, a 4.6 percent increase over 2010/11 exports estimated at 32,500 mmt. Domestic Soybean Derivatives Market Experiencing Weak Crush Margins High domestic soybean prices have resulted in weak crush margins for the processing sector and are expected to continue into the first or second quarter of next year. Those vertically integrated into biodiesel production have been able to offset the weak crush margins. The biodiesel industry is anticipating a revision to the Brazilian blending mandate from 5 percent biodiesel blend to increase to 7 percent sometime in late 2012 or early 2013. This will boost domestic demand and profitability in a sector that operates well under capacity. Other relevant reports: 2011 Brazil Oilseeds and Products Annual Report 2011 Brazil Annual Biofuels Report
Posted: 31 October 2011

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