By Alastair Stewart
DTN South America Correspondent
SAO PAULO, Brazil (DTN) -- The expansion of Brazilian soybean planted area will slow in 2016-17, with acreage rising just 1.5 million acres next season, forecasts Agroconsult, a local farm consultancy.
Once again, limits in access to credit will limit planted area while the oilseed will cease to expand onto corn and cotton acres.
"We are being conservative in our forecasts for next season," Andre Pessoa, director of Agroconsult, told a press conference in Sao Paulo.
Expansion in Brazilian soybean area has been constant in recent years, rising an average of 5% over the past nine years. The projected 2% increase in acreage next year would be the smallest in eight years.
The growth in area will be driven by margins that will be the same or possibly better next year. The current terms on exchange deals for inputs in return for future soy deliveries are currently more favorable than at the same stage last year.
Area will expand onto pasture in the central Cerrado regions of Brazil. In more established areas, the recent trend for soybeans to move onto first-crop corn and cotton acres will end and indeed these crops could stage a comeback, said Pessoa.
Meanwhile, expansion will likely stall in the Mapitoba region in the eastern Cerrado, after yet another year of crop losses. That is significant because this is Brazil's main grain frontier.
More generally, ambitious expansion plans will be put on hold amid the political and economic crisis that has caused a credit crunch.
The extent of that crunch this year depends on how the political situation plays out. Tensions have risen dramatically over the past week with rising calls for President Dilma Rousseff to resign and mass protests. Rousseff's government is mired in a corruption scandal, but the underlying driver for discontent is her handling of an economy that has dived into the worst recession in living memory. But even if she resigns or impeached, the route to political stability that would allow economic recovery appears far from clear. The continued uncertainty inevitably means banks become extremely conservative.
Farmers will once again invest more in fertilizing the soybean crop in 2016, with total sales seen rising 1 million metric tons (mmt) on the year to 32.2 mmt, said Pessoa.
He explained that they reduced the volume of fertilizers last year to reduce costs but will not be in a position to do that in 2016-17 due to the risk of reducing fertility.
But, obviously, a lack of credit could scuttle those plans.
(AG)
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