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Caution reigns as Brazil soy farmers eye another record crop

Sao Paulo | Reuters –– Brazilian soy farmers are about to start sowing what could be a third consecutive record crop, but caution is their motto as near-term weather forecasts are less than ideal and low grain prices combined with rising costs are squeezing margins.

Soybean planting in Brazil’s leading agricultural states is only allowed after Sept. 15, following a period of three months in which the land must be left fallow to avoid the spread of disease in the tropical soil.

Many farmers, aiming for a quick harvest that would allow them to plant a second crop of corn under the best conditions, hope to begin sowing seed in the first days of the season.

But in the center-west grain belt the weather is not likely to accommodate that goal. Steady rain is not forecast until mid-October, in line with the region’s historical climate patterns but later than many farmers had hoped.

“It’s going to be risky to plant in the dry earth this year, hoping for the rain to come,” said meteorologist Marco Antonio dos Santos of local meteorology firm Somar. “We don’t see regular rain immediately after Sept. 15.”

Nery Ribas, technical director at Mato Grosso state’s Aprosoja farmer’s association, agreed.

“The risk of planting before regular rain is too high. Only a few will take the chance,” he said. “We cannot afford to waste the initial investment by having to replant fields.”

Waiting another month to plant soybeans would not affect the size of the soy crop, but it would delay the planting of a second crop of corn or cotton, reducing farmer’s potential profits.

Indeed, many private consultancies published their estimates for Brazil’s 2014-15 soybean crop this week and not a single one pegged production below 90 million tonnes, which would beat the past season’s record of 85.65 million.

Another reason farmers are not likely to force early planting is the rising cost of soybean seeds, fertilizers and pesticides: up 15 per cent from a year ago, according to the Mato Grosso state farm institute Imea. The price of seeds alone has climbed 40 per cent since mid-2013.

Meanwhile, benchmark soybean prices have fallen 33 per cent on the Chicago Board of Trade (CBOT) in the past 12 months.

“Costs are fixed. The problem now is the prices for the soybeans. Our message to farmers is caution, caution, caution,” Ribas said.

Emerson Nunes, an agronomist in charge of monitoring grain crops at Cocamar, one of the largest co-operatives in No. 2 soy state Parana, said farmers are worried about the profit outlook. The U.S., Brazil’s biggest competitor in the soybean market, is getting ready to harvest a record crop, pushing down international prices.

“Some may use seeds saved from last season or avoid buying agrochemicals in advance,” Nunes said.

The weather forecast for the season’s first weeks is not the one farmers wished for, but the outlook for the entire period indicates a record crop.

The El Nino weather phenomenon could hit Brazil with mild intensity in the coming months, boosting much desired rainfall during the growing period, forecasters said.

— Gustavo Bonato reports for Reuters from Sao Paulo, Brazil.

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