Almanaque Aprosoja Brazil’s Soybean Production and ... · Almanaque Aprosoja Brazil’s Soybean...

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Almanaque Aprosoja Brazil’s Soybean Production and Processing Outlook DTN/The Progressive Farmer 2010 Ag Summit

Transcript of Almanaque Aprosoja Brazil’s Soybean Production and ... · Almanaque Aprosoja Brazil’s Soybean...

Almanaque Aprosoja Brazil’s Soybean Production

and Processing Outlook

DTN/The Progressive Farmer 2010 Ag Summit

Soybean Production

Soybean Production in Brazil

Source: Conab / Elaborated by Aprosoja

Soybean Production in Brazil Millions of Hectares and Millions of Tons

Area

Production

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56%

36%

8%

Share Production (%)

CAGR 7,61%

Large Scale Farming in Mato Grosso

Soybean Harvesting

Corn Planting

•! Scale, mechanization, technology

•! Two crops in the same year – soybeans/corn, soybeans/cotton

•! No irrigation

Average Yields and Production Risk in Brazil

Avarege Yield: Source: Kleffmann Group / Standard Deviation: Source: Burgo, Marcelo Nery , ESALQ/USP Piracicaba, 2005

Above Average

Average

Below Average

Average Yields of Soybeans Standard Deviation of Yields of Soybeans

Mato Grosso state has the highest soybean yields per hectare

…and the lowest production risks…

Soybeans - Area and Production Projections for Brazil

Source: Agroconsult

CAGR 2.4 %

Soybean Production Projections (Million Tons and Million Hectares) - Brazil

Soybean Yield (1.000 kg/ha) – Main Players

Source: Agroconsult

Soybean Yield Projections (1,000 kg/hectare) – Brazil, Argentina and USA

USA

Soybean Production Projections – Main Players

Source: Agroconsult

Soybean Production Projections (Million Tons)

Mill

ion

Tonn

es

Projected CAGR 2010-2015

Past CAGR 2000-2010

USA

Biotechnology

Source: CTNBio, Soystats 2010, Agroconsult (Brazil data)

Adoption of Biotech-enhanced Soybean Seedstock GMOs Approved in Brazil

Soy

bean

s

99%

91% 80%

72%

GMO soybeans planted before 2005 were brought into Brazil illegally from Argentina.

Corn Production in Brazil

Summer Crop Yield (1000kg/ha) Corn 2nd Crop Yield (1000kg/ha)

Corn Area Mix (Summer and 2nd Crop) Corn Area and Production - Brazil

Source: Agrocosult

Area (million ha) Production (million tons) Summer 2nd Crop

CAGR 2.9% CAGR 2.0%

CAGR 4.2 %

Biotechnology

Source: CTNBio, GMO Compass, Agroconsult (Brazil data)

Adoption of Biotech-enhanced Corn Seedstock GMOs Approved in Brazil

Cor

n

99%

91% 80%

72%

Points to Watch in the 10/11 Season

La Niña. Planting in Mato Grosso delayed for 3 weeks at least. This will affect 2nd crop (area and yields and also transportation costs. Concerns of possible drought later in the season in the south of the country (RS), where weather yields have been good for last two years.

Weather Risk

Farmers purchased inputs for the 2010/11 season during the first semester of 2010. Since, during this period futures price was around$1.5 to $2/bu lower than current standards, they managed to reduce their costs by 3% in US$ and 16.2% in BRL.

Costs and Returns

New interpretation of an old law (Lei n° 5.709/71) is creating uncertainty in the market. This interpretation states that brazilian companies with foreign ownership should be treated as foreign co.

Restrictions on Foreign Ownership of

Land

The 20 largest producers in Mato Grosso planted 3 million acres (up from 1.3 mln acres five years ago) and were responsible for 20% of soybean output. (Source: IMEA)

Consolidation Trend

Soybean Processing

Source ABIOVE – Sep 2010

Brazilian Soybean Processing 2006/07-2010/11 (000 Tons)

PROCESSING +9%

MEAL

OIL

49%

53%

23%

Domestic Market + 12%

Domestic Market +3.5%

Export + 13%

Export: +3%

Biodiesel Mandate of 5% Drives Demand for Soyoil

Estimated Demand and Biodiesel Purchases through Brazil’s Petrol Agency Auctions

Biodiesel Plants and Capacity in Brazil (2010)

Source: MME

Broiler: 226%

Beef: 50%

Pork: 139%

•! 58% of Brazil’s Soymeal demand is from Poultry and 27% from the Pork industry (both = 85%)

•! Economic stabilization, strong domestic market, low cost and aggressive international marketing

Source: ABIEC, ABEF, UBA , SINDIRAÇÕES, and ABIPECS, 2010

2ND WORLD PRODUCER

3RD WORLD PRODUCER

4TH WORLD PRODUCER

Meat Production Growth (1994-2009)

Logistics

-./-01

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!! Basis range from U$ 0,5 to U$ 2,7/bu +/- Port Basis

US$ 100/ Ton

US$ 20/ Ton

Source: Céleres / Aprosoja, 2010 16%

36%

25%

8%

5%

5% 2%

Soybean Production in Brazil – Logistics Costs

Source: Cargill, 2010

Transportation Problems BR 163

Transportation Cost Reductions with BR 163

Sorriso – A. Araguaia, MT

835 km (520 miles)

Alto Araguaia - Santos, SP

1,100 km (690 miles)

Source: Aprosoja

Total: 1,935 km (1,210 miles)

Route Ferronorte Sorriso – Santarém, PA

1,344 km (840 miles)

Total: 1,344 km (840 miles)

Cost Reduction (Estimated): US$ 30/Ton

Route BR 163

Source: Aprosoja

Rondonopolis

East-West RR

Midwest Railroad

North-South Railroad

Ferronorte Railroad

Expansion Projects of the Rail Mesh

Source: Ministério dos Transportes, IBGE, ANTF and CIA Factbook.

Brazil’s Northern Ports

Source: Aprosoja

Exports by Port (2009)

TOTAL BRAZIL

Environment Issues

Brazilian Biomes

AREA (Millions of

km2)

ConservedArea (%)

Bioma Amazônia 4.2 85.0

Cerrado 2.0 61.1 Mata Atlântica 1.1 27.4

Caatinga 0.8 62.7

Pampa 0.2 41.3

Pantanal 0.1 88.7

Source: Mapa de Cobertura Vegetal dos Biomas Brasileiros. Ministério do Meio Ambiente. 2006.

Brazilian Environmental Legislation

0% 35% (was 20%)

80% (was 50%)

Other Countries Cerrado Forest

Legal Reserve

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Source: CIA Factbook, 2010 Compiled by Ricardo Arioli Silva

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LEGENDA

FEDERAL PARKS INDIAN RESERVATIONS

STATE PARKS

INDIAN RESERVATIONS AND ENVIRONMENT CONSERVATION AREAS IN THE AMAZON

Preserved Area is larger than California + Ohio states. 67% of these Preserved Areas belong to farmers

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Converted Areas in Mato Grosso

36% 64% Original Vegetation

MATO GROSSO X USA

TOTAL AREA versus AGRICULTURE AREA

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Source: USDA, NASS, 2010; IMEA, 2010. Compiled by Ricardo Arioli Silva

MATO GROSSO X USA

CRP – Conservation Reserve Program

Source: Conservation Reserve Program, 2007. Compiled by Ricardo Arioli Silva

State Preserved

Area Payment for Farmers

(1.000 US$) In Bushels per acre

(1.000 acres) TOTAL Amount paid

(U$/acre) Based on U$ 12/bu

Illinois 1,065 112.344 105.50 8.8

Indiana 310 29.155 94.05 7.8

Iowa 1,934 209.707 108.40 9.0

Minnesota 1,793 110.416 61.60 5.1

Total USA 36,055 1.821.201 50.60 4.2

Mato Grosso 92,970 ZERO ZERO ZERO

Future

Cattle Productivity: 36 Kg / hectare

(33 lb/acre)

Soy + Corn 7.067 Kg / hectare

(107 bu/acre or 6,420 lb/ac)

Low Productivity pastures could be converted into Soybeans …when? At what pace?

170 Million hectares (410 million acres)

Source: Aprosoja / 1 sc = 1 bag of 60 kg of beans or 2.2 bushels/bag

Pros and Cons of Converting Pasture Comparison – Leasing Land vs Converting Pasture

Economics of Pasture Land Convertion IR

R

Soybeans Price - CME

•! Less diseases in soybeans •! Longer term contract •! Capital appreciation – if owned •! Land can be taylored

PROS

•! Upfront investment required •! Credit access and cost •! Normally poor logistics •! A significant amount of the very prime land

is already into soy production •! Lack of historical data

CONS

Lease contracts of 11bags/hectare are equivalent to pasture conversion @ 1,75 exchange rate in different price levels. If land leases of less than this amount are available, farmers would prefer the lease.

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Water Land

Source: FAO (2000); FAO (2007). Elaboration: ICONE

Brazil: Agricultural Superpower

Source: CIA Factbook, 2010 Compiled by Ricardo Arioli Silva

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Brazil: Agricultural Superpower ?

Ricardo Arioli Silva Director [email protected]