June 7, 2002

By Bryce Myrick
Director, TFB Agricultural Marketing Education

What Does The Future Hold for Brazilian Agriculture? In 1999, the government of Brazil's goal was to put 90,000,000 new acres into production in 10 years. As of today, they are ahead of schedule.

This climate-friendly country has obstacles that will hinder their agriculture production, but the positives far outweigh the negatives. With deep topsoil, 50-90 inches of rain a year, and a long planting season, production is exploding. Many farmers are able to double-crop. While soybeans and corn are their main crops, the country is very diversified with land in cotton, sugarcane, coffee, and citrus.

Cheap land, labor, chemicals, equipment and low regulatory restrictions create opportunities in farming. Income and property taxes are low, but sales tax is about 18 percent. The government gives a 6 percent sales tax exemption on agriculture equipment made in the country. Inflation is currently about 7 percent.

The negatives to Brazil may take years to overcome. Banks do not loan money to buy land and only loan small amounts for farm operation. Poor roads, limited railroads, very little on-farm or commercial grain storage, and low government support hurts producers. When these problems start to be solved, Brazil will be a major agriculture force.

KC Wheat - July

Fundamentals: Drought in the Ukraine & China will have an impact on price.
Technical Analysis: Trend—Down/Resistance—2.88/Support—2.80

Corn - September

Fundamentals: Midwest rains caused a rebound.
Technical Analysis: Trend—Down/Resistance-2.23/Support—2.07

Feeder Cattle - October

Fundamentals: Cash live cattle hurting feeders.
Technical Analysis: Trend—Down/Resistance—78.50/Support—74.50

Live Cattle - August

Fundamentals: Huge Red Meat & Poultry in cold storage.

Technical Analysis: Trend—Down/Resistance—64.80/Support—60.60