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Commodity Intelligence Report
January 12, 2006

Brazil:  Post-Planting Soybean Update

Planting operations for the 2005/06 soybean growing season in Brazil came to an end in late December, with virtually all areas of the country being sown within the normal planting window. Timely rains during the October–December period across the majority of the growing region gradually raised soil moisture levels, ensuring strong early season vegetative growth and development.

View an enlarged image of soybean area distribution.The USDA January estimate for Brazilian soybean production is a record 58.5 million tons, from a harvested area of 21.5 million hectares.  Area is forecast to decline 6 percent this year while production is expected to increase 13 percent.  Soybean acreage is expected to decline owing to a reversal of economic conditions which has significantly reduced soybean profitability compared to recent years.  Farmers in Brazil experienced significant crop and financial losses last season owing to drought, a strengthening currency, and declining international soybean prices.  The farmers' difficult financial situation has been exacerbated by a reduction in available credit to plant the 2005/06 crop.  Government and private surveys of planting intentions have subsequently led officials to believe that a modest reduction in soybean acreage will occur this year, ranging from 4 to 7 percent.  Post-planting surveys of actual sown acreage will be carried out in the next few months, enabling crop area to be estimated with greater confidence.

Weather and Crop Conditions
December brought an end to planting operations across Brazil, and marked the beginning of the most important growing period for the 2005/06 soybean crop.  The bulk of the crop will go through vegetative and reproductive growth stages during January and February, with harvest generally occurring from mid-February to the end of April.  Rainfall during December was variable, but generally sufficient to promote View an enlarged image of the rainfall maps.vigorous crop development.  Compared to last year, most areas of the country received increased rainfall, including the southern states (which experienced severe drought from December through March). The southern states of Parana, Santa Catarina, and Rio Grande do Sul have been in a touch-and-go weather situation since mid November, experiencing lengthy periods between storm fronts which brought welcome rains.  At the end of December virtually all major production regions had adequate moisture except portions of central, western and southern Parana, and western Santa Catarina.  Soybeans in early growth stages are quite tolerant of dry soil conditions, and agronomists in the southern region report that the crop is progressing despite spotty rainfall.  Weather in January and February throughout southern Brazil will be critical in determining this year’s crop size.  Crop water requirements increase significantly as soybeans approach and pass through the reproductive stages. Near-normal rainfall will be required in all of the southern states to prevent moisture stress and reductions in crop yield potential.

The rainfall maps at left illustrate the difference between rainfall conditions in December 2004 and 2005.  The top maps are from the U.S. Airforce gridded weather data model, while the bottom pair are from the Brazilian government.  Both sources indicate a substantially better overall rainfall pattern in December 2005.

Current vegetative conditions, as indicated by vegetative index data (NDVI) from the Spot Image satellite, are very positive.  Over the great majority of the country vegetative development is superior to the same time last year, especially in the states north of Parana.  The primary soybean growing areas in northern View an enlarged image of current vegetative and soil moisture conditions.and eastern Parana and northern Rio Grande do Sul are also doing very well despite erratic rainfall during the past 6 weeks.  The NDVI data do illustrate, however, that much of southern Rio Grande do Sul and southwestern Parana are experiencing much-reduced vegetative development, likely the result of less than ideal moisture conditions.

Soil moisture conditions across the country are also generally favorable, providing a good foundation for future crop growth during January.  December storm systems have drenched much of the summer oilseed producing region, and have replenished the soil moisture profile to full capacity.  However, soil moisture reserves are scanty in southern Rio Grande do Sul and parts of Parana which does not bode well for developing crops in those areas.  Near-normal rainfall is required over all of southern Brazil during the next two months to ensure that drought stress does not negatively impact crop yield and production.

For more information contact Michael Shean | | (202) 720-7366

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