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A perfect storm is brewing for southern Brazilian farmers, as favorable weather supports expected record soybean production in 2011, and farm prices near a 45% increase over last year.
Along the Crop Expedition Tour by Gazeta do Povo, a Brazilian newspaper, farmers are saying their yields and profits are seen strong. As a result, farmers in the southern state of Parana are buying equipment to upgrade their operation.
"I sold 50% of my new crop soybeans already," says Oilson Vargas, a Cascavel, Parana farmer with 1,800 acres. "I didn't get the top of the market, but I'm fine with that. With that money, I bought a new combine and tractor."
Vargas adds, "Why wait? I'm using high prices and good yields to help me get even better yields next year, with newer technology. It's been a dream come true to be able to get the top-of-the-line equipment."
Farm equipment dealers and market consultants are singing the same boom-time song.
Eduardo Luis, a New Holland tractor marketing specialist, says the hottest selling tractor sizes are 100 horsepower and below. "We have smaller farms in this area. So, with the government's social program incentives for farmers, smaller producers are able to buy tractors," Luis says.
Meanwhile, Dilvo Grolli, the Show Rural Coopavel president, says farmers in the state of Parana know their crop has been made for 2011. "In Parana, 2-3% of the soybean crop has been harvested. Initial yields are 3.6 metric tons per hectare, versus 3.2 to 3.3 tons per hectare last year. And last year was above average. So, this year is better. The state's crop is made," Grolli says. "Farmers are excited."
As of January 15, 25% of Parana's new crop was sold on the cash market, Grolli says. "This is higher than a 15% average sold."
In Mato Grosso, over half of the new crop is already sold.
Because farm sizes are smaller in the state of Parana, fewer farmers forward price versus larger farms in Mato Grosso, Grolli says.
Photography: Hugo Harada, Gazeta do Povo