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Soybean plantation in Brazil should grow for the 12th consecutive year in 2018/19

Some uncertainties, however, should limit area expansion, including higher production costs, freight indecision and currency instability

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Soybean planting in Brazil in the 2018/19 crop, as of September, is expected to grow 3 percent to a record of just over 36 million hectares, according to attractive prices and consistent global demand that stimulate producers of the largest global exporter of the oilseed, Datagro said on Tuesday.

“If this is truly confirmed, it will be the 12th consecutive year of increase in the area planted with soybeans in Brazil,” said Flávio França Júnior, chief of the grain sector, in an online teleconference.

According to Datagro’s preliminary forecasts, the potential output for the cycle is about 121 million tonnes, also a historical mark, after approximately 118 million tonnes in 2017/18.

In addition to strengthened demand, particularly from China, and remuneration rates amid the appreciation of the dollar, France Junior also cited the limited interest of producers in alternative crops such as corn and cotton and an attractive price scenario in 2019 as factors for the prospect of greater sowing.

Some uncertainties, however, should limit area expansion, including higher production costs, indefinitures with freight and exchange rate instability during the election period, which coincides precisely with the producer’s decision to plant soybeans.

“This dollar at 3.70, 3.80 reais is not an equilibrium rate. If we have a pro-reform candidate advancing in the polls, that exchange rate will lose … There is a very high risk of planting with a high exchange rate, and when we next year we will negotiate a very low rate, “he said. said Datagro’s analyst.

The trade dispute between the United States and China is also another point of attention. According to France Júnior, high premiums for Brazil’s soybeans helped offset the fall in prices on the Chicago Stock Exchange, “but everyone lost.”

So far, growers have already traded 17 percent of the next crop in advance, up from 12 percent on average for this time, according to the consultant.