News last update:6 Aug 2012

Brazilian soy farmers spurred by prices

Encouraged by the fact that the price of soy beans rose by about 15% during October, many Brazilian farmers who have not yet completed summer plantings are sowing soy rather than maize or cotton.

Prices in the centre west, where deeply indebted farmers will plant up to 10% less soy this year than last, have risen by up to 18% in the past month. Those in coastal Parana, where 20% more land will be planted to soy this year than last, jumped by close to 10% during October.

The sharp rise in prices came as a surprise for many analysts, who feel that they are not justified by fundamentals.

Until recently, the fact that beans passed through the psychologically important $7/bushel level was not felt to be sustainable, and was attributed to speculative action by funds, but the speculators may prove right. Despite the fact that the US crop has been a large one, it now appears that worldwide demand for meal and oil is growing faster than supply.

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