Aug 13, 2014

Mato Grosso to have Largest Soy Acre Increase in Brazil in 2014/15

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Even with lower soybean prices predicted for next year, farmers in Brazil are still expected to increase their soybean acreage approximately 4% (1.43 million hectares) in 2014/15. According to estimates released by AgRural last week, they are expecting the Brazilian soybean acreage to increase by 1.43 million hectares and 18% of that increase (254,000 hectares) is expected to occur in the state of Mato Grosso. AgRural is estimating that farmers in Mato Grosso will plant 8.51 million hectares of soybeans in 2014/15.

The expected increase in soybean acreage in Mato Grosso is only 3.1%, but since it has the largest soybean acreage in Brazil, the 3.1% represents the largest increase in Brazil in terms of total hectares.

Most of the increases in Mato Grosso will be in the eastern regions of the state where farmers have been rapidly converting pastureland to row crop production. Soybean acreage in eastern Mato Grosso is expected to increase 12%, but the total soybean production increase in the region will not be 12% because the newly converted pastureland does not have the same level of fertility as land that has been in soybean production for several years.

The eastern part of the state will see the biggest increases because of the extensive availability of pastureland. In southern Mato Grosso the increase in soybean acreage will be much less because soybeans will not take land away from the cotton grown in the region. In northern Mato Grosso the soybean acreage increase is only expected to be 2% with most of that coming out of pastureland and rice production.

Even with relatively weak soybean prices, the soybean acreage in Brazil will not decline because the sharp drop in soybean prices came after many farmers had already made their plans for the 2014/15 growing season. The price of soybeans is still relatively strong compared to corn and farmers in southern Brazil are expected to switch some of their full-season corn production to soybeans instead. As they make that switch, they continue to push more of their corn production to the second crop planted after the soybeans are harvested.

Even with these lower soybean prices, soybeans still offer a better return in Brazil than corn, especially if a farmer owns his own land.

In the municipality of Sorriso in central Mato Grosso, the margins for soybean production are some of the lowest in Brazil due to the long distance from the ports. The gross receipts for soybeans produced in Sorriso in 2014/15 is expected to decline 48% compared to 2013/14, but even with the lower receipts, the margins for soybean production for farmers who own their land is still expected to be 24%.

The bigger problem will be for farmers who rent land for 10 sacks of soybeans per hectare or 8.7 bushels per acre. For farmers paying that much rent, they would probably be facing a break-even proposition on their soybeans in 2014/15.