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
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
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)
-./-01
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US$ 100/ Ton
US$ 20/ Ton
Source: Céleres / Aprosoja, 2010 16%
36%
25%
8%
5%
5% 2%
Soybean Production in Brazil – Logistics Costs
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.
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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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
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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Brazil: Agricultural Superpower ?
Ricardo Arioli Silva Director [email protected]