Brazil Farmers Focus on Yields Amid Another Record Soy Harvest

LUÍS EDUARDO MAGALHÃES, Brazil, March 20 (Reuters) – Brazilian farmers, who are expected to harvest another record soy crop thanks to good weather this year, are placing an unprecedented emphasis on maximizing yields, said André Pessoa, founding partner of consultancy Agroconsult. This stance, which ends up reducing use of deforested areas for farming, is being exacerbated by problems in drought-stricken Argentina, where a portion of the crop will be lost, raising international soy prices and potentially capitalizing farmers.


Brazilian Optimism

Following the election of Brazil’s new President, Jair Bolsonaro, the overall change of government has been viewed with optimism. Key economic factors are beginning to look promising as long awaited fiscal reforms begin to take shape. Rabobank is projecting 2.2% GDP growth for Brazil in 2019 vs an estimated 1.3% for 2018. Both inflation and interest rates are expected to remain stable or will decline. In the case of interest rates, they have declined to 6.5%, the lowest level ever recorded. While a steady recovery will help boost certain agribusiness industries like corn and beef, other industries remain tied to trade war issues such as soybeans, cotton and sugar.


Cotton is King

They used to say in the South that “Cotton is King”. Much of the early development of the Southern agriculture states was due to cotton. It dominated US trade in the 19th century. As settlers moved further west, land was bought and sold to wealthy plantation owners seeking to grow more cotton. While cotton has seen its share of ups and downs, soybeans have gotten most of the attention in the pending trade wars. Many may not be aware, that domestic cotton production is even more dependent upon exports than soybeans. While over 50% of our soybeans went to export, almost 75% of our cotton went to export…mainly to China. Much like the soybean market, the trade wars have begun eroding the US cotton export dominance as other countries like Brazil seek to fill the void.


The Time To Invest In Brazil Is Now

As the old saying goes, history does not repeat itself, but it rhymes. Brazil finds itself in a similar situation to that of October of 2002. It was then that Brazil elected President Luiz Inacio Lula da Silva. “Lula” was seen as a left-wing candidate, unfriendly to Brazil’s free market. These fears weakened its currency, the Real, to what was a record low at the time. Hindsight is 20/20, and we now know those fears were unfounded. In the decade to follow, Brazil paid down much of its international debt, and their currency began to strengthen.


US-China dispute sends Brazilian soyabean premiums to 4-year high

Brazilian soyabean premiums have surged to a near four-year high against those of the US as the US-China trade warleads to a scramble by Chinese traders for alternative sources. Soybeans exported at the Brazilian port of Paranaguá were selling for $396.60 a tonne, $66.10 more than the commodity sold on the US southern Gulf of Mexico coast. The premium is the highest since September 2014 and comes as Chinese buyers have been cancelling their US orders as the 25 percentage point tariff increase by Beijing on US soyabean imports took effect this month.


Brazil Soy Boom Spells Bumper Year For Agriculture Equipment

RIBEIRÃO PRETO, Brazil (Reuters) May 9th, 2018 – Agricultural equipment makers in Brazil are banking on strong sales this year, boosted by a second straight bumper soy crop and rising grain prices, which will more than offset weakness in the sugar cane sector, they said at a major trade show. Some machinery producers are forecasting sales growth as high as 8 percent in 2018 as farmers’ confidence rises and record-low interest rates encourage them to borrow and invest.


Why China Is Hungry For Brazilian Soy

Brazil’s poor infrastructure has long hurt the competitiveness of its soybean exports, but the country’s producers will benefit greatly as new rail and port projects come online in the Amazon region. Problems for its main soybean export rivals, the United States and Argentina, will strengthen Brazil’s trade relations with China this year.Brazil’s soybean exports to China will increase further because the South American country has an abundance of land suitable for producing soybeans with higher protein levels.