Analysis: Prices drive soy farming into Brazil cattle country

Tue Oct 23, 2012 1:44am EDT
 
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By Caroline Stauffer and Reese Ewing

NOVA XAVANTINA, Brazil (Reuters) - Farmers like Endrigo Dalcin are so keen to plant Brazil's biggest-ever soybean crop that they are tearing down the fences around once-sacred territory: pastures that feed the world's largest commercial cattle herd.

After the worst drought in 56 years roasted U.S. crops and drove soy prices to an all-time high of almost $18 a bushel, sowing soybeans promises landowners such as Dalcin three times the returns that grazing cattle on grass can.

On an eight-hour drive across Mato Grosso - a Venezuela-sized state in the heart of Brazil's grain belt - he points out the potential in every hectare of unsown land.

"All those termite mounds mean the soil is too acidic to support cattle or crops," said the 38-year-old agricultural economist, who talks with a convert's passion about transforming more of the tropical grasslands into row crops.

"But if you invest 1,200 reais ($600) a hectare in lime and fertilizer, it could be a productive field."

After three decades of farming in the area, Dalcin this year for the first time leased a neighbor's pastureland on a scale he had never attempted before - 700 hectares (1,730 acres) - to plant soy in a bet that the current boom will last longer than past cycles. He has already watched his father go bust twice.

He is also advising hundreds of cattle producers on how to free more land by consolidating their herds as Brazil prepares to shoulder a bigger burden of supplying the world's food at a level few countries have the potential to match.

Other ranchers are pushing more steers into feedlots where they can be fattened more quickly, a trend that is helping drive the biggest expansion in soybean area in a decade but may also quietly add to domestic grain demand.   Continued...

 
A rancher herds cattle in Minas Gerais State, October 20, 2012. REUTERS/Reese Ewing