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By Caroline Stauffer
SAO PAULO, Aug 22 The impetus for a record soybean crop will stimulate Brazilian producers to plant a slightly larger area with the oleaginous in the new season, although the profitability to be less promising than a year earlier, analysts said, and producers.
Despite the high cost of transportation probably erode margins, soybean producers offers less risk against the weak domestic corn prices, which reduce their options, amidst the recovery of u.s. crops.
The private forecasts for the harvest, which may officially can be grown from 15 September, suggest that soy area should grow about 4 percent compared to the previous cycle.
"It could be a new record harvest, but nothing of great importance compared to last year," said Ricardo Tomczyk, Vice President of Aprosoja, which brings together producers of the main producer, Mato Grosso State.
He personally decided not to devote more areas to soybeans this year, because of a less favourable market and increasing costs.
The producers are dealing with an abundance of corn, after two years of record production, and the Government has sought to elevate the public stocks, as a way to prop up prices of cereal.
Very low domestic corn prices make planting soybeans more attractive, although international prices of soybeans are smaller than a year ago, analysts said FCStone.
Another factor that encourages producers to bet on soybeans is the exchange rate: the real weakened nearly 20 percent against the dollar since may, which would favor the Brazilian agricultural exports if this trend will continue until the beginning of the harvest in January.
"In Brazil, the area planted with soybeans should increase between 3 and 5 percent, since the devaluation of the local currency, encourages the production," said Rabobank analysts in a report.
The soybean advance sales actually increased in the last two weeks, when prices rose in Chicago and the real weakened, said the analyst Flávio France Jr., of Porto Alegre.
The marketing sum so far 20 percent of the production envisaged, he said, still well below the nearly 50 percent sold in the same period of last year.
DIFFERENT SCENARIO
The panorama is quite different from a year ago, when the producers got funding to plant soybeans anywhere, and expanded the national area in expressive 10.7 percent, in response to low global stocks after droughts that reduced yields 2011/12 in South America and 2012/13 of the United States.
Global stocks have rallied partly thanks to Brazil's harvest to 81.5 million tons in 2012/13, 23 percent higher than in the previous year. The u.s. Department of agriculture (USDA) also expects a large crop of soybeans in the u.s. from 88.6 million tonnes in 2013/14.
"The tone we see today between soybean producers is of caution," said Elisa Garcia, an analyst with the Institute of Investigation of Mato Grosso producers.
"But many are very well capitalized and have already made investments, so we will see some planted areas more," he added.
The main concern among producers is the increased costs. The producers were benefited last season, when international trade companies absorbed an unexpected spike in shipping costs, but Tomczyk, Aprosoja, said they're getting less for grain this year, with the intermediate agents including on account of the transport costs.
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Brazil's devaluation of currency makes soy expansion more likely
