The soybean planted area in Brazil for the 2024/25 season is expected to see one of the lowest increases in history for the world's largest producer and exporter of the oilseed, according to Maurício Buffon, President of Aprosoja Brasil, on Monday. This comes as soybean prices on the Chicago Board of Trade (CBOT) hit their lowest levels in nearly four years.
Buffon highlighted that the slow growth in planted area is further complicated by the recent flooding in Rio Grande do Sul, Brazil's third-largest soybean-producing state. The floods, which occurred between late April and May, severely impacted the financial stability of local farmers, destroyed arable land, and damaged infrastructure. "We believe that the soybean planted area will see one of the smallest increases. Producers are always optimistic and do their homework, but the financial reality facing most producers makes significant growth challenging," Buffon stated during an interview at the annual conference of the Brazilian Agribusiness Association (Abag).
Soybean prices on the Chicago Board of Trade, a global benchmark, have reached their lowest levels since October 2020, amidst expectations of favorable weather for the U.S. crop and concerns over the U.S. economy.
In recent years, Brazil has seen a strong increase in soybean planted area. The 2023/24 season saw an approximate 4.5% increase compared to the previous year, following a 6% increase in 2022/23, according to data from the National Supply Company (Conab).
According to Buffon, the national planting area is likely to remain almost stable compared to the previous season. "I don't know if [the growth] will even reach 1%. We have to account for the situation in Rio Grande do Sul, where some areas were devastated, and it's uncertain if they can recover from one season to the next," Buffon said.
Clarity on planting intentions will likely emerge after the first rains arrive, typically allowing planting between mid-September and October.
"Even though some regions might see some growth, we have a portion of Rio Grande do Sul's area that will either not be cultivated or will switch to another crop," Buffon opined.
Private analysts also predict a smaller increase in soybean planted area compared to Brazil's recent historical trend, with StoneX estimating a 0.79% increase and Datagro projecting a 1.5% increase, marking the 18th consecutive annual increase.
Buffon also pointed out that, amid low prices, costs remain high, while the strong dollar against the real does not favor producers, as most have already sold the majority of their crop.
"We must remember that the dollar is beneficial when you're selling. Those who have a product to sell... everyone sold at a dollar rate of 5 reais, 4.80 reais...," Buffon explained.
A "strong" dollar during cost formation can also increase expenses for inputs like fertilizers and pesticides.
Buffon noted that producers are trying to lock in prices for the new crop with the dollar at high levels, as much as possible, because "looking at Chicago, things don't look so good" when setting a price.
"Even though they are locking in production costs, a high dollar with a weaker Chicago doesn't bring profitability to the sector... It's a challenging year with costs that need careful management to balance the books."
Comments