If weather cooperates, South American soybean production could be record large in 2009-2010 as farmers there are expected to switch more acreage into soybeans.
Producers in Brazil should shift land into soybeans from other less-profitable crops such as corn, cotton and rice. In Argentina, soybean plantings are expected to rise sharply, due to a drought that has severely limited winter wheat plantings, higher production costs for corn and government regulations that make crops such as corn and wheat unattractive to growers.
Industry sources in Brazil recently told Dow Jones Newswires  that farmers in that country will probably plant 3-5% more soybeans this year and expect a soy crop of more than 60 million metric tons (mmt), given favorable weather. USDA  projects Brazil's 2009-2010 soy production at 60 mmt.
"Farmers are likely to plant up to 5% more land with soy compared to 2008-2009, and this could help bring in a record crop," Steve Cachia, a senior commodities analyst at Cerealpar  told Dow Jones. He said farmers won't plant in new areas, but are likely to plant more soybeans than corn because the price of corn has little room for hikes due to high stocks and diminished export potential.
Cachia estimated Brazil's soy crop could reach 62 mmt in 2009-2010, if the weather is favorable. Brazil's National Commodities Supply Corp., or CONAB , pegs Brazil's current 2008-2009 soy crop at 57.1 mmt compared to 60 mmt in 2007-2008.
Soybean plantings for 2008-2009 were put at 21.7 million hectares (53.6 million acres) Soy was planted in 21.7 million hectares of land in 2008-2009, up 2% compared to 2007-2008.
Pedro Jacyr Bongiolo, president of giant soybean producer Grupo Andre Maggi , told Dow Jones that environmental restrictions hamper the expansion to suitable new growing areas.
Bongiolo, however, expects farmers to shift from growing cotton to planting more soy in areas such as Mato Grosso, the No.1 soy-producing state. With good weather, the upcoming 2009-2010 soy crop should reach over 60 mmt, he said.
Brazilian farmers are well capitalized this year as they have received good prices for this year’s soy crop while the government has is making more credit available for agriculture for 2009-2010. Falling prices for fertilizer and other crop inputs should also help boost plantings.
In Argentina, soybean acreage is expected to surge. In a report released late on Friday, the Rosario Grain Exchange , Argentina’s largest exchange, forecast soybean plantings would jump to 18.5 million hectares (45.7 million acres), which would smash the previous record of 16.6 million hectares (41 million acres) set in 2008-2009. The exchange sees Argentine soy production reaching 50 mmt.
While wheat and corn acres should fall, "everything leads one to believe that despite the poor season last year, farmers are once again going to place their bets on soybeans," the exchange said.
Some analysts see Argentina’s soy area rising even higher. Soy planting is likely to surge to between 19 million and 20 million hectares (47-49.5 million acres) during the 2009-2010, according to the exchange's top climatologist Eduardo Sierra.
"What with the global crisis and after the sharp blow dealt by the drought, farmers are going to opt for the crops that are the cheapest and safest bet," said Diego de la Puente, an analyst at the Buenos Aires-based Novitas consulting firm told Reuters News Service  last week.
"Unless we see a political move that makes (corn and wheat) prices more attractive for farmers or an opening of exports, everyone expects soy area to grow," he added, estimating a record 19 million hectares (47 million acres).
Soybean plantings of that size could see the country's 2009-2010 harvest soar to 54 mmt, as long as the weather returns to normal, said Pablo Adreani, an analyst at the AgriPAC consultancy.
USDA currently projects Argentina’s 2009-2010 soybean crop at 51 mmt, up from this year’s drought-slashed 32 mmt.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.