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Commodity Intelligence Report
September 30, 2010

Economic Outlook Good for Brazil to Plant Corn and Soybeans

Brazil corn and soybean plantings are approaching with most seeding to take place from October to December. Early soybean planting began September 16 when the seasonal planting ban to prevent the spread of soybean rust ended. Following main season soybeans, safrinha corn is planted in January and February. Currently dry weather is preventing planting in the central section, very little sowing is expected until seasonal rains begin.

The FAS agricultural office in Brasilia reported in July that corn planting will be lower in 2010/11 for the third straight year. High yields in 2009/10 have left plentiful local supplies and reduced internal prices relative to other crops, and higher input costs will encourage soybean plantings. Recent profitability estimates by DERAL, the Parana Ministry of Agriculture, as published by Safras & Mercado are for 14 percent returns over costs for soybeans and 7 percent returns for corn. Increases in commodity prices have improved the outlook for both crops. A month ago, profitability was estimated at 10 percent for soybeans and minus 10 percent for corn.

Price quotes in western Parana have increased in the past three months rising 23 percent for corn from June to early September and 24 percent for soybeans. The soybean to corn price ratio in August in west Parana was favorable for soybeans at 2.33 (i.e. $372/$160). A year ago the ratio was 2.93 and even more favorable for soybeans; however, in August 2008 the ratio was at an average level of 2.10. The price ratio in early September has dropped to 2.19 as corn prices have increased faster than soybean prices.

Strong demand for corn and soybeans in Asia along with weaker than expected yields in the United States and other Northern Hemisphere countries, are supporting prices. World stock levels are considered neither very low nor excessive. The neutral stock levels are an encouraging environment for Brazilian corn and soybean producers to grow large crops.


For more information contact Paul Provance | | (202) 720-0873
USDA-FAS, Office of Global Analysis

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