NEWS
Soy Frontier at Middle Age - 1
Marcia Zarley Taylor DTN Executive Editor
Fri May 15, 2015 04:49 PM CDT
(Page 1 of 4)

SORRISO, MATO GROSSO, BRAZIL (DTN) -- Farmers landlocked on the planet's most remote soybean production region have a secret to share. Things aren't as grim as the threat of Chicago's $8.50 soybeans or sub-$4 corn would lead you to believe. They've survived worse.

Degraded pasture and raw land cost Mato Grosso soybean pioneers Darci Getulio Ferrarin Senior and Junior $160 per acre in 1998. With their sweat equity and paved roads, it now commands $6,900 per acre. (DTN photo by Marcia Zarley Taylor)

Just ask Brazil pioneer Darci Getulio Ferrarin, an athletic-looking 70-year-old, with a movie star's smile. "We're going through a messy market situation now, but we'll get out of it," Ferrarin told American farmers when they visited earlier this year. By mid-April, his northern Mato Grosso's cash bids there were running $8.43 per bushel, about half the price of 2012's glory days. But because the dollar has appreciated 50% against the Brazilian real since then, those U.S. dollars buy more in local currency. The windfall means Ferrarin is insulated from much of the pain North Americans feel, at least for the 2015 crop.

Ferrarin's own rags-to-riches story parallels the fate of Mato Grosso during Brazil's biggest soybean boom years. It's testimony to the fortitude of farmers and agribusiness here who face transportation and economic obstacles few U.S. farmers would envy.

"Five-dollar soybeans didn't stop them in the early 2000s," said Bob Tetrault, a Foreign Agricultural Service crop analyst who has monitored Brazil's soy expansion by satellite and ground visits for decades. With trends toward irrigation and double- or triple-cropping, "Brazil will surpass the U.S. as the world's top soy producer and just keep going," he said, leaving North Americans to concentrate on corn in the future. In May, USDA forecast the next crop Brazilians will plant could reach a record 97 million metric tons in 2015/16 -- up nearly threefold from its 37.5 mmt crop at the turn of the century.

"It will be hard for Brazil to grow as fast as it has from 2000 again, but in five years they could easily be producing a soybean crop another 20% bigger than today's," Tetrault forecast.

CIVILIZATION FLASH FORWARD

Northern Mato Grosso was largely jungle until the 1980s, with land clearing and thick smoke still choking the air around Ferrarin's hometown of Sorriso when he settled only 15 years ago. Except for some early warnings from FAS crop forecasters like Tetrault and others in the late 1990s, few U.S. farm organizations or policymakers seriously considered that Brazil would end America's 50-year dominance of world soybean markets any time soon. Now Mato Grosso alone produces 30% of the country's soybeans and nearly 9% of the world's production. Officially, USDA expects Brazil as a whole will export about 46 million metric tons of soybeans this year, just slightly below 48.7 mmt for the U.S.

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