November 12, 2002

Brazil:  Surging Soybean Cultivation Continues

 Outlook for 2002/03

Farmers are expected to significantly increase soybean acreage in Brazil again this season, just as a global oilseed shortage and a strongly depreciating local currency fuel a potential boom in profits.  As the 2002/03 planting season gets underway, a more advantageous setting could hardly be imagined for Brazilian soybean growers.  The Brazilian Real has depreciated about 40 percent against the US dollar this year, following a 20-percent decline in 2001.  The weakening currency has substantially enhanced the value of export commodities such as soybeans during the past 2 years, and is catalyzing an unprecedented surge in soybean cultivation across the country.  Total soybean area increased 2.4 million hectares or 17 percent last year, and is forecast to rise an additional 1.65 million or 10 percent this season.  This unprecedented 2-year expansion is roughly equal to Iowa's entire soybean acreage. Strong international soybean prices and a weak local currency have already led to record sales of the bumper 2002/03 crop, with Safras & Mercado reporting in November that forward sales had reached 38 percent of total national production, or approximately 19.0 million tons.  This compares to a normal rate of sales at this time of year of roughly 12 percent.  USDA currently estimates 2002/03 soybean area at a record 18.0 million hectares, up 0.5 million from last month and up 1.65 million from last year. Brazil’s 2002/03 soybean production is estimated at a record 49.0 million tons, up 1.0 million from last month and up 5.5 million or 13 percent from last year’s bumper harvest.

Quantum Shift in Rate of Expansion

During the 10-year period 1991/92 to 2000/01 Brazilian soybean acreage increased at an average annual rate of approximately 4 percent.  This gradual expansion was the result of producers in the Center-West states opening new tracts of land from virgin Cerrado, while at the same time farmers in Southern states reduced their plantings of summer corn in favor of soybeans.  Beginning in 2001, however, Brazil’s economy and its currency began to weaken as the global recession and the Argentine crisis unfolded. Ironically, though these circumstances slowed growth in most other sectors of the Brazilian economy, they proved a boon to producers of agricultural exports and set the stage for a remarkable acceleration in soybean cultivation nationwide. For the past 2 years, while the Brazilian currency depreciated approximately 60 percent against the US dollar, soybean acreage is estimated to have expanded by approximately 27 percent.  This equates to an average annual rate of increase of 13.5 percent, or more than 3 times the normal rate achieved during the previous decade. This quantum shift in soybean expansion has been accomplished by accelerated clearing of new land in the Center-West states, and by large-scale reductions in acreage devoted to competing summer crops in southern and central states.  Chief among these competing crops is summer or main season corn, which has seen its forecast acreage decline 1.8 million hectares or 17 percent during the last 2 growing seasons.  By comparison, soybean acreage during the same period has been forecast to increase by 4.1 million hectares.

The recent upsurge in soybean cultivation is a national phenomenon, with all producing states registering unprecedented growth.  The following table outlines the growth rates at a state level.  

                                                    * 2002/03 figures are projections based on current state-level area forecasts

Planting Conditions in 2002/03

The main planting period for Brazil’s soybean crop normally runs from October through December, with early field reports indicating that near-normal progress has been achieved to date in sowing the 2002/03 crop.  Safras & Mercado reported that approximately 13 percent of the crop was sown by November 1, which was well behind the pace set last year at 24 percent, but near the 5-year average pace of 16 percent. Relatively dry and hot October weather across much of the Center-West delayed initial planting operations in important regions where farmers like to get their crops in as early as possible.  The delays experienced through October, caused by insufficient rainfall, are not unusual and have not derailed the projected expansion in 2002/03. By all reports, farmers remain committed to increasing soybean acreage by a significant margin this year and have a wide planting window to work with.  The summer rainy season was slightly delayed this year, but began in earnest in late October.  Beneficial soaking rains reached virtually all of the primary soybean growing regions by early November, and have spurred planting efforts across the entire soybean belt. It is expected that sowing progress reports in coming weeks will show marked improvement, as growers take advantage of the current moisture.  USDA’s soil moisture model provides a synopsis of the regional moisture status and currently indicates excellent surface soil moisture conditions predominate in most of the soybean growing areas of Brazil.

For more information, contact Michael J. Shean
of the Production Estimates and Crop Assessment Division, FAS at (202) 720-7366.