Soy Is Strong
11 December 2008 
Soy has been grown in Asia for 3,000 years, and in recent years, cultivated around the globe. Use of soy meal for flour, oil, and animal feed is strong, and soy’s capacity for biodiesel continues to grow. As a lower-input crop garnering high prices worldwide, soy looks big for 2008.
Great Expectations
Brazil is the world’s largest producer of soy with more than 20 million hectares (m. Ha), over one-fifth of Brazil’s total cultivated land. The 2008 crop seems very strong; according to the US Department of Agriculture’s Foreign Agriculture Service (USDA-FAS), present crop conditions in Brazil are “good to excellent, with minimal weather problems in Mato Grosso and Rio Grande do Sul.” Mato Grosso is the country’s largest production area,generating over 30% of Brazil’s soybeans. Currently, Brazil is forecast to produce 60.1 million metric tons (MMT) from 21.7 m. Ha. The recent harvest was very wet, however — particularly in Mato Grosso — as soy was planted from eight days to a month late to reduce soybean rust disease.
In the US, growers are reversing the previous year’s trend by planting less corn and more soy in 2008. USDA said soy growers are planning for an increase of up to 18% from 2007.
USDA Chief Economist Joe Glauber doesn’t see oilseed stocks growing, however, due mostly to Chinese demand for soy. “Global demand for soybeans is likely to expand, mostly due to growth in China, where high incomes are increasing the demands for meat and vegetable oil,” Glauber says. “Global oilseed stocks are unlikely to rebound in 2008/09, as oilseed supply gains are unlikely to significantly outpace demand growth.”
High international prices are contributing to more worldwide growth, and should promote increased area in 2008/09. Indian cotton growers in Vidarbha, who have suffered in recent seasons, are shifting to soybeans, which have better per-acre returns and, as early maturing crops, are less susceptible to damage by incessant rain and have the opportunity for a second crop. Robust soy prices have increased the 2008 soybean area in the region to 1.7 m. Ha from last year’s 1.5 m. Ha.
Limiting Factors
Area increase in 2008/09 will be met with rising production costs. The escalating cost of inputs continues to strain budgets worldwide. In Brazil, fertilizer costs rose from US $300 per hectare for NPK in 2007 to this February’s price of $750 per Ha. Industry experts expect it to go as high as $900 per Ha this year.
Herbicide prices have nearly doubled from 2007, while fungicides and insecticides have increased at a lesser, but still proscriptive, rate.
Ohio State University Extension Economist Barry Ward says: “The cost of some variables, like fuel, is not as staggering as one would expect, but one thing that we didn’t expect to see were dramatically higher potassium and phosphorus prices.” Although soy doesn’t have the nitrogen requirements of crops like corn, Ward still expects soybean input costs to be 23% higher than the previous year.
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