For several successive years, the U.S. dollar was high at planting time, and lower at harvest in Brazil. Since the prices of both soybeans and the petroleum used to haul just about everything to the farmgate are set in dollars here, that has made inputs relatively more expensive, and income relatively lower for Brazilian farmers.
But that trend has come to an end, and the dollar has pretty much stopped weakening against the real, Brazil's currency. And producers here have had to buy bigger calculators in order to accommodate all the zeroes at the end of their income statements.
What are they buying with their newfound wealth? There are signs - such as the reduced use of expensive cropping loans offered by processors in return for beans in the ground - that Brazilian farmers may have paid down some debt. And now they appear to be spending the extra money on inputs.
A local news report says fertilizer deliveries to end users in January and February of 2012 reached some 3.6 million tons, up nearly 4% from the same two months of 2011. The biggest part of those deliveries were to Mato Grosso ZIP codes, at 742,000 tons.
Meanwhile, there are signs Brazilian producers have been loosening their grip as well to throw money around on chemicals. An ag chemical industry group says 2011 sales were up 11% over 2010 figures, coming to $8.4 billion.
And, for Brazil's acid soils, national lime production was up a reported 14% in 2011, to 28.8 million tons.
A lot of those inputs, of course, are going to soybeans. But Brazil is also the world's number-two ethanol producer. And the fact that three of Brazil's top sugarcane-producing states—São Paulo, Minas Gerais and Paraná - are among the places that got the most NPK deliveries in January and February ought to be a sign that Brazil is tired of coming in at the top of the list of U.S. ethanol's top destinations.
Cash-strapped cane producers here have allowed their fields go beyond the recommended five-year life span, squeezing out another year of production from older plantings - and applying fewer inputs. The resulting lower production has lead to price issues at the pump - and to those rather embarrassingly high import levels of corn ethanol.
But whether it's soybeans for biodiesel or sugarcane for ethanol, Brazilian producers are smiling for the first time in a long time - though, I'll grant you, the guys in the drought-stricken South are a bit more baleful. And their windfall may go into more production.