Record Grain Prices Could Depress Cattle Numbers

Low debt and attractive prices could see pasture converted to soybeans this fall

If there's a hurricane brewing in Florida right now, there's also a Brazilian tsunami of soybeans and corn working its way to full strength for the 2011-12 season.

The storm is whipped up by high prices, and Brazilian farmers carrying less debt due to hefty profits in recent years. And it's likely that much of one of the world's big beef cattle herds will get washed farther North, farther East, and generally away from the flattest of their old pastures.

The western Minas Gerais town where I live, Uberaba, is the home of Brazil's most prestigious Zebu Breeds Fair, where million-dollar bulls are sold by guys who arrive on their own planes at our little airport. The different zones of the parking lot at our shopping mall are named after Zebu breeds (as in, "Honey, did we park in Guzerá, or Nelore?") There are at least a dozen bovine genetics firms with headquarters out on the edge of town. But the truth is that a good part of the herd moved to other places when lucrative sugarcane came in.

Now we may see the same thing happen again, with record-high soybeans elbowing cattle out.

According to estimates, the state of Tocantins holds nearly 25 million of Brazil's 420 million total acres of pasture. Those pasture acres compare to a measly 1.8 million acres in crops there. But according to one local news report, citing consultancies, Brazil's total national crop area will take some 31 million acres away from cattle rangeland this crop year. (There's a lot of unused and underused pasture out there, and cropping it is cheaper than clearing something new. Almost all of Mato Grosso's increase in soybean planted area, last season, came from pasture land.)

The same thing is likely to happen in Goiás state as well, says a report. An agency predicts the state's bean production will climb 10% this year, using an estimated 300,000 acres of pasture.

Putting marginal pastureland into soybeans is a questionable move. Most of that pasture is low-producing land that hasn't been planted, fertilized or even limed in too long.

For now, that is. In the meantime, there's likely lots of Brazilian cattle looking for a place they can get away from the soybean tsunami.

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