"At current prices producers are not being compensated. If I could make the decision of whether to plant right now, I would not have planted soya," grower Marcos da Rosa said on Thursday during a conference in Cuiab, Mato Grosso's capital. Earlier this week, Imea started asking producers about their planting intentions. "We need returns to cover our production costs and what we invested," said Jos Guarino Fernandes, another farmer, adding that it is early to make an accurate forecast of the plating area. "But I don't see the economic incentive for Mato Grosso producers to increase planting area in the next season."
Brazil has the potential to raise corn and soya output because there are areas available for planting that are now being used to raise cattle, Rosa said. Certain farmers also have available planting space even after Brazil toughened environmental laws for land use, he said. Low prices in Chicago are leading Brazilian producers to delay sales to commodities traders such as Bunge and Archer Daniels Midland.
Fernandes, who does not have enough storage space, has physically delivered his soyabeans but did not actually close any sale. The plan, he said, "is to fix the price when conditions improve or when the bills start to arrive." Adverse climate conditions in the United States or a weakening of Brazil's real could turn the tide in favor of Brazilian producers, Fernandes said. Elso Pozzobon, another farmer, said he, too, is waiting for better prices.
"It is a year of a full harvest and empty pockets," he said, adding that producers may reduce supply in the next harvest as a result. "We will watch developments in the US to analyze whether to keep or even reduce planting area," Pozzobon said. Last month, Brazil's agricultural statistics agency, Conab, raised for the fourth time its estimate for the country's 2016/17 soyabean crop, now seen at 110.2 million tonnes.
Copyright Reuters, 2017