MercoPress. South Atlantic News Agency

Brazilian farmers forecasted to increase soybeans acreage next season

Despite a rebound in sugar prices, rising fertilizer and pest-control costs, soybeans are still more attractive

Brazil's soybean farmers will plant their highest-ever acreage next season, despite growing pest problems and soaring fertilizer and transport costs.

Soybean growers in the world's second ranked producing country will raise sowings by about 100,000 hectares to 23.3m hectares for 2010-11, matching a record set six years before, a report from the US Department of Agriculture's Brasilia bureau said.

Despite sugar prices firm by historic standards, even after their recent collapse, and the cotton market remaining strong, soybeans “will remain the favoured crop due to [their] market liquidity”.

“A very limited amount of soybean acreage will be converted to sugarcane,” the briefing said.

The increase defies a fall in soybean prices to their lowest last month since August 2007, undermined by expectations of record South American production, while many of farmers' bills have soared.

Fertilizer costs have jumped by 20% over the past month and “continue to rise”, the report said, adding that trucking rates had jumped by up to 50% this season thanks to a squeeze on capacity.

“High transportation costs continue to significantly affect producers' profitability” the briefing said, adding that infrastructure improvements such as new road and rail routes were failing to keep up with production growth.

Furthermore, farmers needed to make “significant investments” in sprays to keep pests until control. “Lack of crop rotation practices in the North and Northeast regions has amplified disease and pest occurrences,” the bureau said.

The report pencilled in Brazil's soybean production next year hitting 67.5m tonnes, in line with the record for 2009-10 as estimated by official USDA forecasts.

The data comes as US farmers are starting work on soybean plantings expected to rise by 647,000 acres to a record 78.1m acres.

Soybean prices, while down some 7% in Chicago this year, have fared better than those for corn and wheat, supported by strong Chinese demand for crop and some difficulties for South American producers in getting their crop onto vessels.

Nonetheless, the bureau is more upbeat than the USDA itself on the Brazil's soybean export hopes, pegging them at a record 28.5m tonnes this season, supported by Chinese orders. The USDA on Friday forecast Brazil's 2009-10 shipments at 26.3m tons