Required Report - public distribution

**Date:** 5/1/2005

**GAIN Report Number:** BR5613

BR5699

**Brazil**

**Oilseeds and Products**

**Annual**

**2005**

**Approved by:**

Oliver Flake, Agr![](media/image1.wmf)icultural Attaché

U.S. Embassy

**Prepared by:**

Elizabeth Mello, Agricultural Attaché

**Report Highlights:**

Disappointment continues for many Brazilian soybean farmers in 2004/05
as a drought that affected nearly half the soybean-producing states
caused mediocre yields. High production costs and a strong Real relative
to the dollar also resulted in unfulfilled potential for Brazil's
soybean sector for the second year in a row. Brazilian 2004/05 soybean
production is forecast at 54.5 MMT and area is estimated 22.8 million
hectares. Stocks are high as farmers continue to a significant
percentage of the crop on-farm and in Brazil's maxed-out storage
facilities. Production and area are expected to expand mildly in 2005/06
to 59 MMT on 23.8 million hectares, as expansion in the North and
Center-West continues and area growth in the South comes to a close.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Brasilia \[BR1\]

\[BR\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Economic Overview 4](#economic-overview)

[Statistical Tables 5](#statistical-tables)

[A. Production, Supply & Demand Tables
5](#a.-production-supply-demand-tables)

[B. Trade Matrices 11](#b.-trade-matrices)

> [Soybeans 11](#soybeans)
>
> [Soybean Meal 12](#soybean-meal)
>
> [Soybean Oil 13](#soybean-oil)
>
> [Cottonseed Meal 14](#cottonseed-meal)
>
> [Cottonseed Oil 15](#cottonseed-oil)

[C. Price Tables 16](#c.-price-tables)

[D. Policy 19](#d.-policy-table)

[NARRATIVE ON SUPPLY, DEMAND, POLICY &
MARKETING......................................20](#narrative-on-supply-demand-policy-marketing)

[Production................................................................................................................................................20](#production)

[Area..........................................................................................................................................................23](#area)

[Yields 24](#yields)

[Soybean Rust 24](#soybean-rust)

[Consumption...........................................................................................................................................25](#consumption)

[Loss 26](#__RefHeading___Toc102369009)

> [Trade.........................................................................................................................................................26](#__RefHeading___Toc102369010)

[Financing 28](#financing)

[Brazilian Contracts on CBOT 30](#brazilian-contracts-on-cbot)

> [**Stocks** 31](#__RefHeading___Toc102369014)
>
> [**Policy** 31](#policy)

[Import Tariffs 31](#import-tariffs)

[Interstate Movement Tax (ICMS) Exemption (Lei Kandir)
32](#interstate-movement-tax-icms-exemption-lei-kandir)

[Biodiesel 33](#biodiesel)

> [Biotechnology 33](#biotechnology)

[Marketing 36](#marketing)

[Increase in Multinational Participation
36](#increase-in-multinational-participation)

[Infrastructure 36](#infrastructure)

[Total Meals 39](#production-1)

> [**Production** 39](#consumption-1)
>
> [**Consumption** 39](#consumption-1)
>
> [**Trade** 39](#trade)
>
> [**Stocks** 39](#stocks)
>
> [**Marketing** 39](#marketing-1)

[Total Oils](#production-1) 40

> [**Production** 40](#consumption-2)
>
> [**Consumption** 40](#consumption-2)
>
> [**Trade** 40](#trade-1)

# Executive Summary

# This year's drought conditions took a crop positioned to set record yields and turned it in into a simply a good one overall. Most injury to the crop was limited to isolated areas, with the exception of Rio Grande do Sul, where irreversible damage appears to be widespread throughout the state. Paraná, Mato Grosso do Sul, Sao Paulo, and Santa Catarina were other states affected by the drought to varying degrees. Due to the drought's impact, post lowered its production estimate for 2004/05 to 54.5 MMT with an expected average yield of 2.5 tons/ha. 

# 

# Due to the losses, Post is also reporting a slight drop in 2004/05 harvested area to 22.8 million hectares. Although Brazilian farmers are experiencing increasing costs of production and lower market prices, expansion of crop land into soybeans continues in the frontier areas of Northeastern Mato Grosso, Tocantins, and Pará. A recent post trip to expansion areas revealed that the land-clearing process has not slowed in the North despite lower soybean and cattle prices. While many farmers are still clearing cerrado or forested lands for pasture, it would appear that the majority of farmers are now planting with an initial crop of rice or simply going directly to soybeans. As the remaining available land in Northern Mato Grosso continues to be purchased at a rapid pace, increasing land values have pushed soybean production into the new frontier areas of Pará, Piauí, Tocantins, and Rondónia, areas with more affordable land prices and lower transportation costs due to port options such as Santarém and Itacotiara. 

Soybean area is forecast to increase 4 percent next crop year to 23.8
million hectares. Growth in area is expected to continue in the
Center-West, Bahia, and in other expansion areas to the North. The
South, however, is expected to maintain the same area due to less
available land for expansion and the discouraging soybean situation in
the region over the last two years. Local media have reported a minor
amount of shifting into rice and horticultural crops in this area.

The current overall trend of high input costs and low prices is expected
to discourage farmers in general from expanding at the rates that took
place in the past three years. The strength of the Brazilian currency,
the Real, has also decreased Agricultural exports' competitiveness, in
addition to decreasing margins. The potential impact of soybean rust in
the U.S. is one of the few variables that could cause a market upswing
in Brazil's favor and trigger greater growth in area planted.

Soybean stocks at harvest time this year were higher than normal,
largely due to farmers' refusal to sell their product at current market
prices, which are lower than last year. However, stocks may be drawn
down dramatically during the year due to a smaller than expected crop,
growing domestic use (including shortages at Brazilian crushing plants),
and strong exports. Soybean exports are forecast to increase
significantly this year from 19.2 to 23.4 MMT, due to increased
production, greater exportable supply, and continued strong global
demand for soybeans and meal.

Brazil is home to 243.000 soybean producers in 17 states widely
dispersed throughout the country. Twenty percent of the country's total
agricultural income comes from soybeans. Of Brazil's \$10 billion in
total exports last year, soybeans made up 12%, and 25% of agricultural
exports. The evolution of agricultural production and the
"tropicalization" of soybeans have allowed the extensive and rudimentary
occupation of the Cerrado to be replaced by activity based on
technology, with potential economic, social, and environmental
sustainability. The evolution of the soybean crop has brought about
improvement in the standard of living and the development of
infrastructure in the areas of transport, education, and health. It is
expected that Brazil is 3-5 years away from being the number one global
producer of soybeans.

# Economic Overview

Brazil is living one of its best economic moments in recent memory. GDP
growth of 5% in 2004 has been coupled with booming exports, healthy
external accounts, inflation under control, decreasing unemployment and
reductions in the debt-to-GDP ratio. President Lula and his economic
team have implemented prudent fiscal and monetary policies and pursued
necessary microeconomic reforms. All of this has contributed to reducing
Brazil risk to less than 400 basis points over U.S. Treasuries and an
upgraded credit rating.

Brazil has made great strides, but significant vulnerabilities remain.
Despite registering its first year-on-year decline in 2004, Brazil\'s
largely domestic government debt remains high, at 52% of GDP. Total
foreign debt, while falling, is still large in relation to Brazil\'s
modest export base. Healthy export growth, which has anchored the
positive trade and current accounts, mitigates this concern. Personal
incomes, while up in 2004, registered a significant decline over the
previous decade. Income distribution remains markedly skewed.

**Economic Indicators**

+----------------------+-----+-----+-----+-----+-----+-----+------+
|                      | 1   | 2   | 2   | 2   | 2   | 2   | 20   |
|                      | 999 | 000 | 001 | 002 | 003 | 004 | 05\* |
+----------------------+-----+-----+-----+-----+-----+-----+------+
| GDP Growth (%)       | 0.9 | 4.0 | 1.5 | 1.9 | .5  | 5.3 | 4.0  |
+----------------------+-----+-----+-----+-----+-----+-----+------+
| Inflation (%)        | 8.9 | 6.0 | 7.7 | 1   | 9.3 | 7.6 | 5.6  |
|                      |     |     |     | 2.5 |     |     |      |
| (IPCA/IBGE))         |     |     |     |     |     |     |      |
+----------------------+-----+-----+-----+-----+-----+-----+------+
| Average Exchange     | 1   | 1   | 2   | 2   | 3   | 2   | 3.0  |
| Rate (R\$/US\$)      | .81 | .83 | .35 | .93 | .07 | .93 |      |
+----------------------+-----+-----+-----+-----+-----+-----+------+
| Total Exports        | 4   | 5   | 5   | 6   | 7   | 9   | 101  |
|                      | 8.1 | 5.0 | 8.2 | 0.4 | 3.1 | 6.5 |      |
| (US\$ billion)       |     |     |     |     |     |     |      |
+----------------------+-----+-----+-----+-----+-----+-----+------+
| Total Imports        | 4   | 5   | 5   | 4   | 4   | 6   | 75   |
|                      | 9.2 | 5.7 | 5.5 | 7.2 | 8.3 | 2.8 |      |
| (US\$ billion)       |     |     |     |     |     |     |      |
+----------------------+-----+-----+-----+-----+-----+-----+------+

Source: Central Bank and Ministry of Planning \* Predicted

# Statistical Tables

## A. Production, Supply & Demand Tables

+----------------+--------+--------+--------+--------+--------+--------+
| **PSD Table**  |        |        |        |        |        |        |
|                |        |        |        |        |        |        |
| ######## C     |        |        |        |        |        |        |
| ountry: Brazil |        |        |        |        |        |        |
|                |        |        |        |        |        |        |
| **Oilseed,     |        |        |        |        |        |        |
| Soybean        |        |        |        |        |        |        |
| (Local)**      |        |        |        |        |        |        |
|                |        |        |        |        |        |        |
| **(1000        |        |        |        |        |        |        |
| HA)(1000 MT)** |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
|                |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
|                |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
|                | 2003   | R      | 2004   | Es     | 2005   | Fo     |
|                |        | evised |        | timate |        | recast |
+----------------+--------+--------+--------+--------+--------+--------+
|                | USDA   | Post   | USDA   | Post   | USDA   | Post   |
|                | Of     | Es     | Of     | Es     | Of     | Es     |
|                | ficial | timate | ficial | timate | ficial | timate |
|                | \      | \      | \      | \      | \      | \      |
|                | [Old\] | [New\] | [Old\] | [New\] | [Old\] | [New\] |
+----------------+--------+--------+--------+--------+--------+--------+
| Market Year    |        | 0      |        | 0      |        | 0      |
| Begin          |        | 2/2004 |        | 2/2005 |        | 2/2006 |
+----------------+--------+--------+--------+--------+--------+--------+
| Area Planted   | 21475  | 21436  | 22800  | 23000  | 0      | 23800  |
+----------------+--------+--------+--------+--------+--------+--------+
| Area Harvested | 21475  | 21400  | 22800  | 22850  | 0      | 23800  |
+----------------+--------+--------+--------+--------+--------+--------+
| Beginning      | 3129   | 3090   | 4186   | 4420   | 3903   | 4900   |
| Stocks         |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| Production     | 52600  | 52580  | 54000  | 54500  | 0      | 59000  |
+----------------+--------+--------+--------+--------+--------+--------+
| MY Imports     | 350    | 350    | 213    | 360    | 0      | 200    |
+----------------+--------+--------+--------+--------+--------+--------+
| MY Imp. from   | 0      | 0      | 0      | 0      | 0      | 0      |
| U.S.           |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| MY Imp. from   | 0      | 0      | 0      | 0      | 0      | 0      |
| the EC         |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| TOTAL SUPPLY   | 56079  | 56020  | 58399  | 59280  | 3903   | 64100  |
+----------------+--------+--------+--------+--------+--------+--------+
| MY Exports     | 19571  | 20000  | 20976  | 19260  | 0      | 23450  |
+----------------+--------+--------+--------+--------+--------+--------+
| MY Exp. to the | 10200  | 10720  | 12000  | 12000  | 0      | 13000  |
| EC             |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| Crush Dom.     | 29172  | 29000  | 30320  | 30900  | 0      | 32500  |
| Consumption    |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| Food Use Dom.  | 0      | 0      | 0      | 700    | 0      | 750    |
| Consump.       |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| F              | 3150   | 2600   | 3200   | 3520   | 0      | 3650   |
| eed,Seed,Waste |        |        |        |        |        |        |
| Dm.Cn.         |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| TOTAL Dom.     | 32322  | 31600  | 33520  | 35120  | 0      | 36900  |
| Consumption    |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| Ending Stocks  | 4186   | 4420   | 3903   | 4900   | 0      | 3750   |
+----------------+--------+--------+--------+--------+--------+--------+
| TOTAL          | 56079  | 56020  | 58399  | 59280  | 0      | 64100  |
| DISTRIBUTION   |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| Calendar Year  | 0      | 0      | 0      | 0      | 0      | 0      |
| Imports        |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| Calendar Yr    | 0      | 0      | 0      | 0      | 0      | 0      |
| Imp. U.S.      |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| Calendar Year  | 0      | 0      | 0      | 0      | 0      | 0      |
| Exports        |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+
| Calndr Yr Exp. | 0      | 2      | 0      | 0      | 0      | 0      |
| to U.S.        |        |        |        |        |        |        |
+----------------+--------+--------+--------+--------+--------+--------+

+--------------+--------+--------+--------+--------+-------+-------+
| **PSD        |        |        |        |        |       |       |
| Table**      |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **Country:   |        |        |        |        |       |       |
| Brazil**     |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **Meal,      |        |        |        |        |       |       |
| Soybean      |        |        |        |        |       |       |
| (Local)**    |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **(1000      |        |        |        |        |       |       |
| MT)**        |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
|              | 2003   | R      | 2004   | Es     | 2005  | For   |
|              |        | evised |        | timate |       | ecast |
+--------------+--------+--------+--------+--------+-------+-------+
|              | USDA   | Post   | USDA   | Post   | USDA  | Post  |
|              | Of     | Es     | Of     | Es     | Off   | Est   |
|              | ficial | timate | ficial | timate | icial | imate |
|              | \      | \      | \      | \      | \[    | \[    |
|              | [Old\] | [New\] | [Old\] | [New\] | Old\] | New\] |
+--------------+--------+--------+--------+--------+-------+-------+
| Market Year  |        | 0      |        | 0      |       | 02    |
| Begin        |        | 2/2004 |        | 2/2005 |       | /2006 |
+--------------+--------+--------+--------+--------+-------+-------+
| Crush        | 29172  | 29000  | 30320  | 30900  | 0     | 0     |
+--------------+--------+--------+--------+--------+-------+-------+
| Extr. Rate,  | 0.     | 0.     | 0.     | 0.     | 0     | 0     |
| 999.9999     | 785685 | 853448 | 785026 | 776699 |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Beginning    | 763    | 688    | 469    | 388    | 425   | 788   |
| Stocks       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Production   | 22920  | 24750  | 23802  | 24000  | 0     | 26200 |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imports   | 200    | 250    | 200    | 200    | 0     | 100   |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imp. from | 0      | 0      | 0      | 0      | 0     | 0     |
| U.S.         |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imp. from | 0      | 0      | 0      | 0      | 0     | 0     |
| the EC       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL SUPPLY | 23883  | 25688  | 24471  | 24588  | 425   | 27088 |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Exports   | 14630  | 16300  | 14646  | 14500  | 0     | 16000 |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Exp. to   | 8600   | 9000   | 9000   | 9100   | 0     | 9800  |
| the EC       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Industrial   | 0      | 0      | 0      | 0      | 0     | 0     |
| Dom. Consum  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Food Use     | 0      | 0      | 0      | 0      | 0     | 0     |
| Dom.         |        |        |        |        |       |       |
| Consump.     |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Feed Waste   | 8784   | 9000   | 9400   | 9300   | 0     | 10138 |
| Dom. Consum  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL Dom.   | 8784   | 9000   | 9400   | 9300   | 0     | 10138 |
| Consumption  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Ending       | 469    | 388    | 425    | 788    | 0     | 950   |
| Stocks       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL        | 23883  | 25688  | 24471  | 24588  | 0     | 27088 |
| DISTRIBUTION |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar     | 0      | 288    | 0      | 0      | 0     | 0     |
| Year Imports |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar Yr  | 0      | 0      | 0      | 0      | 0     | 0     |
| Imp. U.S.    |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar     | 0      | 13500  | 0      | 0      | 0     | 0     |
| Year Exports |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calndr Yr    | 0      | 34     | 0      | 300    | 0     | 0     |
| Exp. to U.S. |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+

+--------------+--------+--------+--------+--------+-------+-------+
| **PSD        |        |        |        |        |       |       |
| Table**      |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **Country:   |        |        |        |        |       |       |
| Brazil**     |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **Oil,       |        |        |        |        |       |       |
| Soybean      |        |        |        |        |       |       |
| (Local)**    |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **(1000      |        |        |        |        |       |       |
| MT)**        |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
|              | 2003   | R      | 2004   | Es     | 2005  | For   |
|              |        | evised |        | timate |       | ecast |
+--------------+--------+--------+--------+--------+-------+-------+
|              | USDA   | Post   | USDA   | Post   | USDA  | Post  |
|              | Of     | Es     | Of     | Es     | Off   | Est   |
|              | ficial | timate | ficial | timate | icial | imate |
|              | \      | \      | \      | \      | \[    | \[    |
|              | [Old\] | [New\] | [Old\] | [New\] | Old\] | New\] |
+--------------+--------+--------+--------+--------+-------+-------+
| Market Year  |        | 0      |        | 0      |       | 02    |
| Begin        |        | 2/2004 |        | 2/2005 |       | /2006 |
+--------------+--------+--------+--------+--------+-------+-------+
| Crush        | 29172  | 29000  | 30320  | 30900  | 0     | 0     |
+--------------+--------+--------+--------+--------+-------+-------+
| Extr. Rate,  | 0.     | 0.     | 0.     | 0.     | 0     | 0     |
| 999.9999     | 180241 | 209655 | 180013 | 182848 |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Beginning    | 150    | 122    | 93     | 82     | 100   | 215   |
| Stocks       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Production   | 5258   | 6080   | 5458   | 5650   | 0     | 5720  |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imports   | 50     | 50     | 40     | 30     | 0     | 30    |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imp. from | 0      | 0      | 0      | 0      | 0     | 0     |
| U.S.         |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imp. from | 0      | 0      | 0      | 0      | 0     | 0     |
| the EC       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL SUPPLY | 5458   | 6252   | 5591   | 5762   | 100   | 5965  |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Exports   | 2655   | 2940   | 2706   | 2500   | 0     | 2650  |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Exp. to   | 0      | 35     | 0      | 30     | 0     | 35    |
| the EC       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Industrial   | 160    | 165    | 160    | 160    | 0     | 165   |
| Dom. Consum  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Food Use     | 2550   | 3065   | 2625   | 2887   | 0     | 3100  |
| Dom.         |        |        |        |        |       |       |
| Consump.     |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Feed Waste   | 0      | 0      | 0      | 0      | 0     | 0     |
| Dom. Consum  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL Dom.   | 2710   | 3230   | 2785   | 3047   | 0     | 3265  |
| Consumption  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Ending       | 93     | 82     | 100    | 215    | 0     | 50    |
| Stocks       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL        | 5458   | 6252   | 5591   | 5762   | 0     | 5965  |
| DISTRIBUTION |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar     | 0      | 50     | 0      | 0      | 0     | 0     |
| Year Imports |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar Yr  | 0      | 0      | 0      | 0      | 0     | 0     |
| Imp. U.S.    |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar     | 0      | 2405   | 0      | 0      | 0     | 0     |
| Year Exports |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calndr Yr    | 0      | 0      | 0      | 0      | 0     | 0     |
| Exp. to U.S. |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+

+------------------+-------+-------+-------+-------+-------+-------+
| **PSD Table**    |       |       |       |       |       |       |
|                  |       |       |       |       |       |       |
| **Country:       |       |       |       |       |       |       |
| Brazil**         |       |       |       |       |       |       |
|                  |       |       |       |       |       |       |
| **Oilseed,       |       |       |       |       |       |       |
| Cottonseed**     |       |       |       |       |       |       |
|                  |       |       |       |       |       |       |
| **(1000 HA)(1000 |       |       |       |       |       |       |
| MT)**            |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
|                  | 2003  | Re    | 2004  | Est   | 2005  | For   |
|                  |       | vised |       | imate |       | ecast |
+------------------+-------+-------+-------+-------+-------+-------+
|                  | USDA  | Post  | USDA  | Post  | USDA  | Post  |
|                  | Off   | Est   | Off   | Est   | Off   | Est   |
|                  | icial | imate | icial | imate | icial | imate |
|                  | \[    | \[    | \[    | \[    | \[    | \[    |
|                  | Old\] | New\] | Old\] | New\] | Old\] | New\] |
+------------------+-------+-------+-------+-------+-------+-------+
| Market Year      |       | 01    |       | 01    |       | 01    |
| Begin            |       | /2004 |       | /2005 |       | /2006 |
+------------------+-------+-------+-------+-------+-------+-------+
| Area Planted     | 0     | 1000  | 0     | 1150  | 0     | 1250  |
| (COTTON)         |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Area             | 1100  | 1000  | 1150  | 1150  | 0     | 1250  |
| H                |       |       |       |       |       |       |
| arvested(COTTON) |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Seed to Lint     | 0     | 0     | 0     | 0     | 0     | 0     |
| Ratio            |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks | 0     | 0     | 0     | 0     | 0     | 0     |
+------------------+-------+-------+-------+-------+-------+-------+
| Production       | 2240  | 1976  | 2350  | 2375  | 0     | 2600  |
+------------------+-------+-------+-------+-------+-------+-------+
| MY Imports       | 5     | 1     | 3     | 3     | 0     | 0     |
+------------------+-------+-------+-------+-------+-------+-------+
| MY Imp. from     | 0     | 0     | 0     | 0     | 0     | 0     |
| U.S.             |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| MY Imp. from the | 0     | 0     | 0     | 0     | 0     | 0     |
| EC               |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY     | 2245  | 1977  | 2353  | 2378  | 0     | 2600  |
+------------------+-------+-------+-------+-------+-------+-------+
| MY Exports       | 106   | 10    | 110   | 110   | 0     | 120   |
+------------------+-------+-------+-------+-------+-------+-------+
| MY Exp. to the   | 0     | 0     | 0     | 0     | 0     | 0     |
| EC               |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Crush Dom.       | 1788  | 1683  | 1818  | 1850  | 0     | 2000  |
| Consumption      |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Food Use Dom.    | 0     | 0     | 0     | 0     | 0     | 0     |
| Consump.         |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Feed,Seed,Waste  | 351   | 284   | 425   | 418   | 0     | 480   |
| Dm.Cm.           |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Dom.       | 2139  | 1967  | 2243  | 2268  | 0     | 2480  |
| Consumption      |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks    | 0     | 0     | 0     | 0     | 0     | 0     |
+------------------+-------+-------+-------+-------+-------+-------+
| TOTAL            | 2245  | 1977  | 2353  | 2378  | 0     | 2600  |
| DISTRIBUTION     |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Calendar Year    | 0     | 1     | 0     | 1     | 0     | 0     |
| Imports          |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Calendar Yr Imp. | 0     | 0     | 0     | 0     | 0     | 0     |
| U.S.             |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Calendar Year    | 0     | 10    | 0     | 15    | 0     | 0     |
| Exports          |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+
| Calndr Yr Exp.   | 0     | 0     | 0     | 0     | 0     | 0     |
| to U.S.          |       |       |       |       |       |       |
+------------------+-------+-------+-------+-------+-------+-------+

## 

+--------------+--------+--------+--------+--------+-------+-------+
| **PSD        |        |        |        |        |       |       |
| Table**      |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **Country:   |        |        |        |        |       |       |
| Brazil**     |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **Meal,      |        |        |        |        |       |       |
| Cottonseed** |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **(1000      |        |        |        |        |       |       |
| MT)**        |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
|              | 2003   | R      | 2004   | Es     | 2005  | For   |
|              |        | evised |        | timate |       | ecast |
+--------------+--------+--------+--------+--------+-------+-------+
|              | USDA   | Post   | USDA   | Post   | USDA  | Post  |
|              | Of     | Es     | Of     | Es     | Off   | Est   |
|              | ficial | timate | ficial | timate | icial | imate |
|              | \      | \      | \      | \      | \[    | \[    |
|              | [Old\] | [New\] | [Old\] | [New\] | Old\] | New\] |
+--------------+--------+--------+--------+--------+-------+-------+
| Market Year  |        | 0      |        | 0      |       | 01    |
| Begin        |        | 1/2004 |        | 1/2005 |       | /2006 |
+--------------+--------+--------+--------+--------+-------+-------+
| Crush        | 1788   | 1683   | 1818   | 1850   | 0     | 2000  |
+--------------+--------+--------+--------+--------+-------+-------+
| Extr. Rate,  | 0.     | 0.     | 0.     | 0.     | 0     | 0.475 |
| 999.9999     | 470358 | 533571 | 470847 | 486486 |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Beginning    | 5      | 5      | 5      | 5      | 5     | 5     |
| Stocks       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Production   | 841    | 898    | 856    | 900    | 0     | 950   |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imports   | 10     | 5      | 3      | 3      | 0     | 0     |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imp. from | 0      | 0      | 0      | 0      | 0     | 0     |
| U.S.         |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imp. from | 0      | 0      | 0      | 0      | 0     | 0     |
| the EC       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL SUPPLY | 856    | 908    | 864    | 908    | 5     | 955   |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Exports   | 20     | 30     | 25     | 25     | 0     | 35    |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Exp. to   | 0      | 17     | 0      | 0      | 0     | 0     |
| the EC       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Industrial   | 0      | 0      | 0      | 0      | 0     | 0     |
| Dom. Consum  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Food Use     | 0      | 0      | 0      | 0      | 0     | 0     |
| Dom.         |        |        |        |        |       |       |
| Consump.     |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Feed Waste   | 831    | 873    | 834    | 878    | 0     | 913   |
| Dom. Consum  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL Dom.   | 831    | 873    | 834    | 878    | 0     | 913   |
| Consumption  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Ending       | 5      | 5      | 5      | 5      | 0     | 7     |
| Stocks       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL        | 856    | 908    | 864    | 908    | 0     | 955   |
| DISTRIBUTION |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar     | 0      | 0      | 0      | 0      | 0     | 0     |
| Year Imports |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar Yr  | 0      | 0      | 0      | 0      | 0     | 0     |
| Imp. U.S.    |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar     | 0      | 0      | 0      | 0      | 0     | 0     |
| Year Exports |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calndr Yr    | 0      | 0      | 0      | 0      | 0     | 0     |
| Exp. to U.S. |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+

+--------------+--------+--------+--------+--------+-------+-------+
| #####        |        |        |        |        |       |       |
| ## PSD Table |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **Country:   |        |        |        |        |       |       |
| Brazil**     |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **Oil,       |        |        |        |        |       |       |
| Cottonseed** |        |        |        |        |       |       |
|              |        |        |        |        |       |       |
| **(1000      |        |        |        |        |       |       |
| MT)**        |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
|              | 2003   | R      | 2004   | Es     | 2005  | For   |
|              |        | evised |        | timate |       | ecast |
+--------------+--------+--------+--------+--------+-------+-------+
|              | USDA   | Post   | USDA   | Post   | USDA  | Post  |
|              | Of     | Es     | Of     | Es     | Off   | Est   |
|              | ficial | timate | ficial | timate | icial | imate |
|              | \      | \      | \      | \      | \[    | \[    |
|              | [Old\] | [New\] | [Old\] | [New\] | Old\] | New\] |
+--------------+--------+--------+--------+--------+-------+-------+
| Market Year  |        | 0      |        | 0      |       | 01    |
| Begin        |        | 1/2004 |        | 1/2005 |       | /2006 |
+--------------+--------+--------+--------+--------+-------+-------+
| Crush        | 1788   | 1683   | 1818   | 1850   | 0     | 2000  |
+--------------+--------+--------+--------+--------+-------+-------+
| Extr. Rate,  | 0.     | 0.     | 0.     | 0.     | 0     | 0.165 |
| 999.9999     | 166667 | 157457 | 165567 | 167568 |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Beginning    | 0      | 0      | 0      | 0      | 0     | 0     |
| Stocks       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Production   | 298    | 265    | 301    | 310    | 0     | 330   |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imports   | 0      | 1      | 0      | 0      | 0     | 0     |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imp. from | 0      | 0      | 0      | 0      | 0     | 0     |
| U.S.         |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Imp. from | 0      | 0      | 0      | 0      | 0     | 0     |
| the EC       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL SUPPLY | 298    | 266    | 301    | 310    | 0     | 330   |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Exports   | 44     | 55     | 40     | 40     | 0     | 45    |
+--------------+--------+--------+--------+--------+-------+-------+
| MY Exp. to   | 0      | 0      | 0      | 0      | 0     | 0     |
| the EC       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Industrial   | 75     | 60     | 80     | 82     | 0     | 85    |
| Dom. Consum  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Food Use     | 179    | 151    | 181    | 188    | 0     | 195   |
| Dom.         |        |        |        |        |       |       |
| Consump.     |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Feed Waste   | 0      | 0      | 0      | 0      | 0     | 0     |
| Dom. Consum  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL Dom.   | 254    | 211    | 261    | 270    | 0     | 285   |
| Consumption  |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Ending       | 0      | 0      | 0      | 0      | 0     | 0     |
| Stocks       |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| TOTAL        | 298    | 266    | 301    | 310    | 0     | 330   |
| DISTRIBUTION |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar     | 0      | 0      | 0      | 0      | 0     | 0     |
| Year Imports |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar Yr  | 0      | 0      | 0      | 0      | 0     | 0     |
| Imp. U.S.    |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calendar     | 0      | 55     | 0      | 65     | 0     | 0     |
| Year Exports |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+
| Calndr Yr    | 0      | 0      | 0      | 0      | 0     | 0     |
| Exp. to U.S. |        |        |        |        |       |       |
+--------------+--------+--------+--------+--------+-------+-------+

## B. Trade Matrices

## Soybeans

+----------+-------+-------+-------+-------+-------+-------+---------+
| ######   |       |       |       |       |       |       |         |
| # Brazil |       |       |       |       |       |       |         |
|  Soybean |       |       |       |       |       |       |         |
|  Exports |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| In 1000  |       |       |       |       |       |       |         |
| Metric   |       |       |       |       |       |       |         |
| Tons     |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Feb-Jan  |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Country  | Qua   |       |       | \%    |       |       | \%      |
|          | ntity |       |       | Share |       |       | Change  |
+----------+-------+-------+-------+-------+-------+-------+---------+
|          | 2003  | 2004  | 2005  | 2003  | 2004  | 2005  | 20      |
|          |       |       |       |       |       |       | 05/2004 |
+----------+-------+-------+-------+-------+-------+-------+---------+
| World    | 1     | 1     | 1     | 100   | 100   | 100   | -3.66   |
|          | 6,074 | 9,987 | 9,256 |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| United   | 3     | 2     | 241   | 0.02  | 0.01  | 1.25  | ∞       |
| States   |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| China    | 4,142 | 6,200 | 5,580 | 25.77 | 31.02 | 28.98 | -10.01  |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Net      | 3,053 | 3,586 | 3,559 | 19    | 17.94 | 18.48 | -0.76   |
| herlands |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Germany  | 1,622 | 2,235 | 1,630 | 10.1  | 11.18 | 8.46  | -27.09  |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Spain    | 1,210 | 1,570 | 1,596 | 7.53  | 7.85  | 8.29  | 1.67    |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Italy    | 521   | 804   | 906   | 3.24  | 4.02  | 4.71  | 12.71   |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Taiwan   | 192   | 556   | 841   | 1.19  | 2.78  | 4.37  | 51.33   |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Iran     | 355   | 354   | 640   | 2.21  | 1.8   | 3.32  | 77.96   |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Others   | 4979  | 4682  | 4504  |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+

+--------+-------+-------+-------+-------+-------+-------+---------+
| ###### |       |       |       |       |       |       |         |
| # Braz |       |       |       |       |       |       |         |
| il Soy |       |       |       |       |       |       |         |
| bean I |       |       |       |       |       |       |         |
| mports |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| In     |       |       |       |       |       |       |         |
| 1000   |       |       |       |       |       |       |         |
| Metric |       |       |       |       |       |       |         |
| Tons   |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| F      |       |       |       |       |       |       |         |
| eb-Jan |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| C      | Qua   |       |       | \%    |       |       | \%      |
| ountry | ntity |       |       | Share |       |       | Change  |
+--------+-------+-------+-------+-------+-------+-------+---------+
|        | 2003  | 2004  | 2005  | 2003  | 2004  | 2005  | 20      |
|        |       |       |       |       |       |       | 05/2004 |
+--------+-------+-------+-------+-------+-------+-------+---------+
| World  | 1100  | 1124  | 364   | 100   | 100   | 100   | -67.62  |
+--------+-------+-------+-------+-------+-------+-------+---------+
| Pa     | 1100  | 1124  | 364   | 100   | 100   | 100   | -67.62  |
| raguay |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| United | 0     | 0     | 0     | 0     | 0     | 0     | 0       |
| States |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+

## Soybean Meal

+----------+-------+-------+-------+-------+-------+-------+----------+
| ###      |       |       |       |       |       |       |          |
| #### Bra |       |       |       |       |       |       |          |
| zil Soyb |       |       |       |       |       |       |          |
| ean Meal |       |       |       |       |       |       |          |
|  Exports |       |       |       |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| In 1000  |       |       |       |       |       |       |          |
| Metric   |       |       |       |       |       |       |          |
| Tons     |       |       |       |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Feb-Jan  |       |       |       |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Country  | Qua   |       |       | \%    |       |       | \%       |
|          | ntity |       |       | Share |       |       | Change   |
+----------+-------+-------+-------+-------+-------+-------+----------+
|          | 2003  | 2004  | 2005  | 2003  | 2004  | 2005  | 2        |
|          |       |       |       |       |       |       | 005/2004 |
+----------+-------+-------+-------+-------+-------+-------+----------+
| World    | 1     | 1     | 1     | 100   | 100   | 100   | 7.57     |
|          | 2,783 | 3,542 | 4,567 |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Net      | 3,755 | 3,797 | 4,086 | 29.38 | 28.04 | 28.05 | 7.61     |
| herlands |       |       |       |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| France   | 2,873 | 2,628 | 2,993 | 22.48 | 19.41 | 20.55 | 13.88    |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Germany  | 585   | 924   | 1054  | 4.58  | 6.83  | 7.23  | 14.01    |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Iran     | 87    | 387   | 644   | 0.68  | 2.86  | 4.42  | 66.34    |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Spain    | 445   | 350   | 621   | 3.48  | 2.59  | 4.26  | 77.27    |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Thailand | 490   | 603   | 616   | 3.84  | 4.46  | 4.23  | 2.12     |
+----------+-------+-------+-------+-------+-------+-------+----------+
| United   | 483   | 476   | 482   | 3.78  | 3.52  | 3.31  | 1.12     |
| Kingdom  |       |       |       |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| I        | 471   | 703   | 476   | 3.69  | 5.2   | 3.27  | -32.32   |
| ndonesia |       |       |       |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Italy    | 623   | 660   | 448   | 4.88  | 4.87  | 3.07  | -32.19   |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Korea    | 579   | 703   | 434   | 4.53  | 5.19  | 2.98  | -38.22   |
| South    |       |       |       |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Saudi    | 335   | 541   | 387   | 2.62  | 4     | 2.66  | -28.41   |
| Arabia   |       |       |       |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Romania  | 191   | 435   | 361   | 1.49  | 3.22  | 2.48  | -17.03   |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Belgium  | 627   | 335   | 317   | 4.91  | 2.48  | 2.18  | -5.44    |
+----------+-------+-------+-------+-------+-------+-------+----------+
| United   | 96    | 34    | 270   | 0.75  | 0.25  | 1.85  | 683.61   |
| States   |       |       |       |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Ireland  | 126   | 78    | 191   | 0.99  | 0.58  | 1.31  | 145.21   |
+----------+-------+-------+-------+-------+-------+-------+----------+
| Others   | 1     | 1     | 1     |       |       |       |          |
|          | 1,766 | 2,654 | 3,380 |       |       |       |          |
+----------+-------+-------+-------+-------+-------+-------+----------+

+--------+-------+-------+-------+-------+-------+-------+---------+
| #####  |       |       |       |       |       |       |         |
| ## Bra |       |       |       |       |       |       |         |
| zil So |       |       |       |       |       |       |         |
| ybean  |       |       |       |       |       |       |         |
| Meal I |       |       |       |       |       |       |         |
| mports |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| In     |       |       |       |       |       |       |         |
| 1000   |       |       |       |       |       |       |         |
| Metric |       |       |       |       |       |       |         |
| Tons   |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| F      |       |       |       |       |       |       |         |
| eb-Jan |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| C      | Qua   |       |       | \%    |       |       | \%      |
| ountry | ntity |       |       | Share |       |       | Change  |
+--------+-------+-------+-------+-------+-------+-------+---------+
|        | 2003  | 2004  | 2005  | 2003  | 2004  | 2005  | 20      |
|        |       |       |       |       |       |       | 05/2004 |
+--------+-------+-------+-------+-------+-------+-------+---------+
| World  | 3     | 2     | 1     | 100   | 100   | 100   | -38.28  |
|        | 72099 | 88403 | 78009 |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| Pa     | 3     | 2     | 1     | 100   | 100   | 99.94 | -38.31  |
| raguay | 72099 | 88403 | 77905 |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| United | 0     | 0     | 104   | 0     | 0     | 0.06  | ∞       |
| States |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+

## Soybean Oil

+----------+-------+-------+-------+-------+-------+-------+---------+
| ##       |       |       |       |       |       |       |         |
| ##### Br |       |       |       |       |       |       |         |
| azil Soy |       |       |       |       |       |       |         |
| bean Oil |       |       |       |       |       |       |         |
|  Exports |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| In 1000  |       |       |       |       |       |       |         |
| Metric   |       |       |       |       |       |       |         |
| Tons     |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Feb-Jan  |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Country  | Qua   |       |       | \%    |       |       | \%      |
|          | ntity |       |       | Share |       |       | Change  |
+----------+-------+-------+-------+-------+-------+-------+---------+
|          | 2003  | 2004  | 2005  | 2003  | 2004  | 2005  | 20      |
|          |       |       |       |       |       |       | 05/2004 |
+----------+-------+-------+-------+-------+-------+-------+---------+
| World    | 2100  | 2405  | 2531  | 100   | 100   | 100   | 5.23    |
+----------+-------+-------+-------+-------+-------+-------+---------+
| China    | 300   | 607   | 839   | 14.3  | 25.24 | 33.15 | 38.21   |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Iran     | 728   | 816   | 676   | 34.66 | 33.92 | 26.7  | -17.19  |
+----------+-------+-------+-------+-------+-------+-------+---------+
| India    | 415   | 245   | 297   | 19.74 | 10.19 | 11.75 | 21.27   |
+----------+-------+-------+-------+-------+-------+-------+---------+
| South    | 34    | 88    | 85    | 1.62  | 3.7   | 3.39  | -3.68   |
| Africa   |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| United   | 0     | 0     | 80    | 0     | 0     | 3.16  | ∞       |
| States   |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Ba       | 75    | 107   | 78    | 3.58  | 4.44  | 3.07  | -27.12  |
| ngladesh |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Net      | 7     | 27    | 61    | 0.32  | 1.12  | 2.41  | 126.6   |
| herlands |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Morocco  | 99    | 12    | 57    | 4.73  | 0.5   | 2.23  | 371.28  |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Hong     | 79    | 105   | 47    | 3.76  | 4.36  | 1.85  | -55.38  |
| Kong     |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Senegal  | 46    | 68    | 46    | 2.19  | 2.82  | 1.82  | -32.18  |
+----------+-------+-------+-------+-------+-------+-------+---------+
| United   | 20    | 20    | 32    | 0.93  | 0.82  | 1.26  | 62.35   |
| Arab     |       |       |       |       |       |       |         |
| Emirates |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Cuba     | 7     | 0     | 27    | 0.31  | 0     | 1.08  | 0       |
+----------+-------+-------+-------+-------+-------+-------+---------+
| V        | 0     | 18    | 22    | 0.01  | 0.75  | 0.88  | 24.37   |
| enezuela |       |       |       |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+
| Others   | 1810  | 2113  | 2347  |       |       |       |         |
+----------+-------+-------+-------+-------+-------+-------+---------+

+--------+-------+-------+-------+-------+-------+-------+---------+
| ####   |       |       |       |       |       |       |         |
| ### Br |       |       |       |       |       |       |         |
| azil S |       |       |       |       |       |       |         |
| oybean |       |       |       |       |       |       |         |
|  Oil I |       |       |       |       |       |       |         |
| mports |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| In     |       |       |       |       |       |       |         |
| 1000   |       |       |       |       |       |       |         |
| Metric |       |       |       |       |       |       |         |
| Tons   |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| F      |       |       |       |       |       |       |         |
| eb-Jan |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| C      | Qua   |       |       | \%    |       |       | \%      |
| ountry | ntity |       |       | Share |       |       | Change  |
+--------+-------+-------+-------+-------+-------+-------+---------+
|        | 2003  | 2004  | 2005  | 2003  | 2004  | 2005  | 20      |
|        |       |       |       |       |       |       | 05/2004 |
+--------+-------+-------+-------+-------+-------+-------+---------+
| World  | 11    | 47    | 14    | 100   | 100   | 100   | -70.05  |
+--------+-------+-------+-------+-------+-------+-------+---------+
| Arg    | 100   | 31    | 13    | 91.09 | 65.98 | 90.06 | -59.12  |
| entina |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| Pa     | 10    | 3     | 1     | 8.81  | 7.01  | 9.04  | -61.37  |
| raguay |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| U      | 0     | 12    | 0     | 0     | 26.97 | 0     | 0       |
| ruguay |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+
| United | 0     | 0     | 0     | 0     | 0     | 0     | 0       |
| States |       |       |       |       |       |       |         |
+--------+-------+-------+-------+-------+-------+-------+---------+

## Cottonseed Meal

  ----------------- ------------ ------------ ------------ ---------------
  **Brazil                                                 
  Cottonseed Meal                                          
  Exports**                                                

  In Metric Tons                                           

  Country           Quantity                               \% Change

                    2002         2003         2004         2004/2003

  World             24831        16041        13164        -17.94

  United Kingdom    500          6200         13164        112.31

  Belgium           0            6341         0            -100

  Germany           871          3500         0            -100

  Netherlands       23460        0            0            0
  ----------------- ------------ ------------ ------------ ---------------

+-------------+------------+------------+------------+---------------+
| #####       |            |            |            |               |
| ## Brazil C |            |            |            |               |
| ottonseed M |            |            |            |               |
| eal Imports |            |            |            |               |
|             |            |            |            |               |
| In Metric   |            |            |            |               |
| Tons        |            |            |            |               |
+-------------+------------+------------+------------+---------------+
| Country     | Quantity   |            |            | \% Change     |
+-------------+------------+------------+------------+---------------+
|             | 2002       | 2003       | 2004       | 2004/2003     |
+-------------+------------+------------+------------+---------------+
| World       | 7015       | 591        | 9044       | 1431.6        |
+-------------+------------+------------+------------+---------------+
| Paraguay    | 675        | 569        | 8974       | 1477.14       |
+-------------+------------+------------+------------+---------------+
| United      | 40         | 22         | 71         | 227.94        |
| States      |            |            |            |               |
+-------------+------------+------------+------------+---------------+
| Uruguay     | 263        | 0          | 0          | 0             |
+-------------+------------+------------+------------+---------------+
| Argentina   | 6038       | 0          | 0          | 0             |
+-------------+------------+------------+------------+---------------+

## Cottonseed Oil

## 

+------------+------------+------------+------------+----------------+
| #######    |            |            |            |                |
|  Brazil Co |            |            |            |                |
| ttonseed O |            |            |            |                |
| il Exports |            |            |            |                |
|            |            |            |            |                |
| In Metric  |            |            |            |                |
| Tons       |            |            |            |                |
+------------+------------+------------+------------+----------------+
| Country    | Quantity   |            |            | \% Change      |
+------------+------------+------------+------------+----------------+
|            | 2002       | 2003       | 2004       | 2004/2003      |
+------------+------------+------------+------------+----------------+
| World      | 57807      | 36199      | 44410      | 22.68          |
+------------+------------+------------+------------+----------------+
| Iran       | 0          | 5512       | 19550      | 254.67         |
+------------+------------+------------+------------+----------------+
| Egypt      | 5000       | 0          | 9750       | 0              |
+------------+------------+------------+------------+----------------+
| Korea      | 1000       | 7200       | 5500       | -23.61         |
| South      |            |            |            |                |
+------------+------------+------------+------------+----------------+
| Korea      | 0          | 0          | 3000       | 0              |
| North      |            |            |            |                |
+------------+------------+------------+------------+----------------+
| South      | 38900      | 12075      | 2500       | -79.3          |
| Africa     |            |            |            |                |
+------------+------------+------------+------------+----------------+
| Malaysia   | 3000       | 3000       | 2000       | -33.33         |
+------------+------------+------------+------------+----------------+
| Australia  | 0          | 3040       | 2000       | -34.22         |
+------------+------------+------------+------------+----------------+
| Bolivia    | 259        | 0          | 58         | 0              |
+------------+------------+------------+------------+----------------+
| Japan      | 0          | 865        | 42         | -95.15         |
+------------+------------+------------+------------+----------------+
| Trinidad & | 7          | 6          | 10         | 55.56          |
| Tobago     |            |            |            |                |
+------------+------------+------------+------------+----------------+
| United     | 1000       | 2000       | 0          | -100           |
| States     |            |            |            |                |
+------------+------------+------------+------------+----------------+
| India      | 6000       | 0          | 0          | 0              |
+------------+------------+------------+------------+----------------+
| Cape Verde | 0          | 0          | 0          | -100           |
+------------+------------+------------+------------+----------------+
| Chile      | 142        | 0          | 0          | 0              |
+------------+------------+------------+------------+----------------+
| China      | 2500       | 2500       | 0          | -100           |
+------------+------------+------------+------------+----------------+

+-------------+------------+------------+------------+---------------+
| ####        |            |            |            |               |
| ### Brazil  |            |            |            |               |
| Cottonseed  |            |            |            |               |
| Oil Imports |            |            |            |               |
|             |            |            |            |               |
| In Metric   |            |            |            |               |
| Tons        |            |            |            |               |
+-------------+------------+------------+------------+---------------+
| Country     | Quantity   |            |            | \% Change     |
+-------------+------------+------------+------------+---------------+
|             | 2002       | 2003       | 2004       | 2004/2003     |
+-------------+------------+------------+------------+---------------+
| World       | 2996       | 400        | 200        | -49.99        |
+-------------+------------+------------+------------+---------------+
| Paraguay    | 2194       | 400        | 200        | -50           |
+-------------+------------+------------+------------+---------------+
| Japan       | 0          | 0          | 0          | 0             |
+-------------+------------+------------+------------+---------------+
| Germany     | 0          | 0          | 0          | 6.67          |
+-------------+------------+------------+------------+---------------+
| United      | 0          | 0          | 0          | 0             |
| States      |            |            |            |               |
+-------------+------------+------------+------------+---------------+
| Argentina   | 802        | 0          | 0          | 0             |
+-------------+------------+------------+------------+---------------+

## C. Price Tables

+-------------+----------+----------+----------+----------+----------+
| #####       |          |          |          |          |          |
| ## Soybean  |          |          |          |          |          |
| Price Table |          |          |          |          |          |
+-------------+----------+----------+----------+----------+----------+
| Country     | Brazil   |          |          |          |          |
+-------------+----------+----------+----------+----------+----------+
| Commodity   | Oilseed, |          |          |          |          |
|             | Soybean  |          |          |          |          |
+-------------+----------+----------+----------+----------+----------+
| Prices in   | US\$/TON |          |          |          |          |
+-------------+----------+----------+----------+----------+----------+
| Year        | 2003     | 2004     | 2005     | \%       | \%       |
|             |          |          |          | Change   | Change   |
|             |          |          |          | 03/04    | 04/05    |
+-------------+----------+----------+----------+----------+----------+
| Jan         | 214.81   | 290.16   | 206.28   | 35.08    | -28.91   |
+-------------+----------+----------+----------+----------+----------+
| Feb         | 213.61   | 290.87   | 208.02   | 36.17    | -28.48   |
+-------------+----------+----------+----------+----------+----------+
| Mar         | 208.3    | 317.85   |          | 52.59    |          |
+-------------+----------+----------+----------+----------+----------+
| Apr         | 217.81   | 322.48   |          | 48.06    |          |
+-------------+----------+----------+----------+----------+----------+
| May         | 225.19   | 290.45   |          | 28.98    |          |
+-------------+----------+----------+----------+----------+----------+
| Jun         | 232.46   | 263.97   |          | 13.56    |          |
+-------------+----------+----------+----------+----------+----------+
| Jul         | 222.6    | 246.55   |          | 10.76    |          |
+-------------+----------+----------+----------+----------+----------+
| Aug         | 221.39   | 236.82   |          | 6.97     |          |
+-------------+----------+----------+----------+----------+----------+
| Sep         | 239.69   | 232.12   |          | -3.16    |          |
+-------------+----------+----------+----------+----------+----------+
| Oct         | 277.52   | 216.59   |          | -21.96   |          |
+-------------+----------+----------+----------+----------+----------+
| Nov         | 287.42   | 224.42   |          | -21.92   |          |
+-------------+----------+----------+----------+----------+----------+
| Dec         | 281.31   | 219.09   |          | -22.12   |          |
+-------------+----------+----------+----------+----------+----------+
| Export      |          |          |          |          |          |
| Price FOB   |          |          |          |          |          |
| Paranagua   |          |          |          |          |          |
+-------------+----------+----------+----------+----------+----------+

<table>
<colgroup>
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="13"><strong>Domestic Soybean Prices (R$/60 kg.
bag)</strong></td>
</tr>
<tr class="even">
<td rowspan="2"><p>Month/</p>
<p>Location</p></td>
<td colspan="4">2003</td>
<td colspan="4">2004</td>
<td colspan="4">2005</td>
</tr>
<tr class="odd">
<td>PR 1/</td>
<td>SP 2/</td>
<td>RS 3/</td>
<td>MT 4/</td>
<td>PR 1/</td>
<td>SP 2/</td>
<td>RS 3/</td>
<td>MT 4/</td>
<td>PR 1/</td>
<td>SP 2/</td>
<td>RS 3/</td>
<td>MT 4/</td>
</tr>
<tr class="even">
<td>Jan</td>
<td>43.14</td>
<td>41.25</td>
<td>43.28</td>
<td>37.44</td>
<td>45.81</td>
<td>45.85</td>
<td>46.10</td>
<td>41.21</td>
<td>33.04</td>
<td>33.75</td>
<td>33.25</td>
<td>28.90</td>
</tr>
<tr class="odd">
<td>Feb</td>
<td>42.65</td>
<td>39.34</td>
<td>43.30</td>
<td>35.27</td>
<td>44.48</td>
<td>44.35</td>
<td>45.56</td>
<td>37.79</td>
<td>28.30</td>
<td>29.25</td>
<td>29.25</td>
<td>24.43</td>
</tr>
<tr class="even">
<td>Mar</td>
<td>38.56</td>
<td>38.21</td>
<td>39.00</td>
<td>32.9</td>
<td>50.18</td>
<td>49.76</td>
<td>50.71</td>
<td>43.53</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Apr</td>
<td>36.17</td>
<td>36.05</td>
<td>35.24</td>
<td>31.36</td>
<td>51.00</td>
<td>49.75</td>
<td>52.13</td>
<td>47.75</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>May</td>
<td>36.38</td>
<td>35.9</td>
<td>36.11</td>
<td>32.28</td>
<td>45.50</td>
<td>44.32</td>
<td>44.01</td>
<td>43.75</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Jun</td>
<td>35.96</td>
<td>36.18</td>
<td>35.82</td>
<td>32.12</td>
<td>43.88</td>
<td>43.63</td>
<td>43.13</td>
<td>41.50</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Jul</td>
<td>34.96</td>
<td>35.13</td>
<td>34.79</td>
<td>31.30</td>
<td>40.10</td>
<td>40.50</td>
<td>39.50</td>
<td>36.06</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Aug</td>
<td>35.51</td>
<td>35.28</td>
<td>35.15</td>
<td>32.28</td>
<td>38.13</td>
<td>38.28</td>
<td>38.51</td>
<td>34.50</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Sep</td>
<td>38.86</td>
<td>38.19</td>
<td>38.09</td>
<td>34.88</td>
<td>37.30</td>
<td>38.75</td>
<td>36.63</td>
<td>32.83</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Oct</td>
<td>45.14</td>
<td>44.12</td>
<td>44.74</td>
<td>41.38</td>
<td>34.30</td>
<td>35.50</td>
<td>34.60</td>
<td>31.64</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Nov</td>
<td>47.76</td>
<td>46.96</td>
<td>47.76</td>
<td>43.97</td>
<td>33.88</td>
<td>33.25</td>
<td>33.13</td>
<td>30.05</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Dec</td>
<td>46.30</td>
<td>45.49</td>
<td>47.12</td>
<td>41.72</td>
<td>32.50</td>
<td>33.75</td>
<td>32.50</td>
<td>29.93</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>

+------------+-------------+--------------+-------------+-------------+
| #          |             |              |             |             |
| ##### Soym |             |              |             |             |
| eal Prices |             |              |             |             |
+------------+-------------+--------------+-------------+-------------+
| Month 2003 |             |              | 2004        |             |
+------------+-------------+--------------+-------------+-------------+
|            | Exchange    | Reals/Ton    | Exchange    | Reals/Ton   |
|            | Rate        |              | Rate        |             |
+------------+-------------+--------------+-------------+-------------+
| JAN        | 3.4376      | 704.77       | 2.8492      | 718.57      |
+------------+-------------+--------------+-------------+-------------+
| FEB        | 3.5895      | 693.75       | 2.9305      | 688.78      |
+------------+-------------+--------------+-------------+-------------+
| MAR        | 3.4461      | 636.32       | 2.9047      | 766.30      |
+------------+-------------+--------------+-------------+-------------+
| APR        | 3.1069      | 527.75       | 2.9053      | 803.33      |
+------------+-------------+--------------+-------------+-------------+
| MAY        | 2.9549      | 528.81       | 3.0944      | 780.95      |
+------------+-------------+--------------+-------------+-------------+
| JUN        | 2.8827      | 533.57       | 3.1247      | 706.36      |
+------------+-------------+--------------+-------------+-------------+
| JUL        | 2.8790      | 527.39       | 3.0375      | 597.27      |
+------------+-------------+--------------+-------------+-------------+
| AUG        | 3.0017      | 558.81       | 3.0055      | 548.18      |
+------------+-------------+--------------+-------------+-------------+
| SEP        | 2.9229      | 602.95       | 2.8921      | 565.95      |
+------------+-------------+--------------+-------------+-------------+
| OCT        | 2.8608      | 701.52       | 2.8515      | 515.48      |
+------------+-------------+--------------+-------------+-------------+
| NOV        | 2.9106      | 754.00       | 2.7889      | 476.50      |
+------------+-------------+--------------+-------------+-------------+
| DEC        | 2.9245      | 707.27       | 2.7233      | 487.62      |
+------------+-------------+--------------+-------------+-------------+
| Average    | 3.0764      | 623.08       | 2.9256      | 637.94      |
+------------+-------------+--------------+-------------+-------------+

Source: Safras & Mercado

+------------+-------------+--------------+-------------+-------------+
| ###### Soy |             |              |             |             |
| oil Prices |             |              |             |             |
+------------+-------------+--------------+-------------+-------------+
| Month 2003 |             |              | 2004        |             |
+------------+-------------+--------------+-------------+-------------+
|            | Exchange    | Reals/Ton    | Exchange    | Reals/Ton   |
|            | Rate        |              | Rate        |             |
+------------+-------------+--------------+-------------+-------------+
| JAN        | 3.4376      | 1870.23      | 2.8492      | 1864.76     |
+------------+-------------+--------------+-------------+-------------+
| FEB        | 3.5895      | 1920.25      | 2.9305      | 2109.50     |
+------------+-------------+--------------+-------------+-------------+
| MAR        | 3.4461      | 1846.32      | 2.9047      | 2128.70     |
+------------+-------------+--------------+-------------+-------------+
| APR        | 3.1069      | 1711.00      | 2.9053      | 1970.24     |
+------------+-------------+--------------+-------------+-------------+
| MAY        | 2.9549      | 1595.00      | 3.0944      | 1887.14     |
+------------+-------------+--------------+-------------+-------------+
| JUN        | 2.8827      | 1585.24      | 3.1247      | 1713.05     |
+------------+-------------+--------------+-------------+-------------+
| JUL        | 2.8790      | 1548.91      | 3.0375      | 1676.36     |
+------------+-------------+--------------+-------------+-------------+
| AUG        | 3.0017      | 1467.62      | 3.0055      | 1702.27     |
+------------+-------------+--------------+-------------+-------------+
| SEP        | 2.9229      | 1568.18      | 2.8921      | 1727.14     |
+------------+-------------+--------------+-------------+-------------+
| OCT        | 2.8608      | 1817.39      | 2.8515      | 1516.90     |
+------------+-------------+--------------+-------------+-------------+
| NOV        | 2.9106      | 1814.50      | 2.7889      | 1480.00     |
+------------+-------------+--------------+-------------+-------------+
| DEC        | 2.9245      | 1869.55      | 2.7233      | 1450.95     |
+------------+-------------+--------------+-------------+-------------+
| Average    | 3.0764      | 1717.85      | 2.9256      | 1768.92     |
+------------+-------------+--------------+-------------+-------------+

Source: Safras & Mercado

+-------------+-------------+-------------+-------------+-------------+
| ####### Do  |             |             |             |             |
| mestic Soyb |             |             |             |             |
| ean Oil Pri |             |             |             |             |
| ces: Crude  |             |             |             |             |
| and Refined |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| In          |             |             |             |             |
| Brazilian   |             |             |             |             |
| Reals       |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
|             | 2003        |             | 2004        |             |
+-------------+-------------+-------------+-------------+-------------+
| Month       | Crude 1/    | Refined 2/  | Crude 1/    | Refined 2/  |
+-------------+-------------+-------------+-------------+-------------+
| Jan         | 2,004.00    | 47.96       | 1,974.00    | 44.25       |
+-------------+-------------+-------------+-------------+-------------+
| Feb         | 2,037.50    | 47.20       | 2,300.00    | 45.10       |
+-------------+-------------+-------------+-------------+-------------+
| Mar         | 1,942.50    | 46.40       | 2,235.00    | 47.70       |
+-------------+-------------+-------------+-------------+-------------+
| Apr         | 1,800.00    | 45.65       | 2,130.00    | 47.88       |
+-------------+-------------+-------------+-------------+-------------+
| May         | 1,674.00    | 42.40       | 2,010.00    | 46.70       |
+-------------+-------------+-------------+-------------+-------------+
| Jun         | 1,660.00    | 40.90       | 1,812.50    | 46.15       |
+-------------+-------------+-------------+-------------+-------------+
| Jul         | 1,642.00    | 39.85       | 1,826.40    | 43.45       |
+-------------+-------------+-------------+-------------+-------------+
| Aug         | 1,576.25    | 39.00       | 1,823.50    | 41.90       |
+-------------+-------------+-------------+-------------+-------------+
| Sep         | 1,655.00    | 37.95       | 1,802.80    | 41.64       |
+-------------+-------------+-------------+-------------+-------------+
| Oct         | 1,936.00    | 39.56       | 1,627.25    | 41.05       |
+-------------+-------------+-------------+-------------+-------------+
| Nov         | 1,962.50    | 42.85       | 1,570.00    | 39.65       |
+-------------+-------------+-------------+-------------+-------------+
| Dec         | 1,997.50    | 44.10       | 1,530.00    | 38.28       |
+-------------+-------------+-------------+-------------+-------------+
| Note: 1/    |             |             |             |             |
| São Paulo - |             |             |             |             |
| R\$/MT --   |             |             |             |             |
| w/ICMS 12%. |             |             |             |             |
| 2/ Retail - |             |             |             |             |
| São Paulo - |             |             |             |             |
| R\$/20 unit |             |             |             |             |
| case of 900 |             |             |             |             |
| ml cans.    |             |             |             |             |
|             |             |             |             |             |
| Source:     |             |             |             |             |
| ABIOVE      |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
|             |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
|             |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+

+--------------+----------+----------+----------+----------+----------+
| ####         |          |          |          |          |          |
| ### Monthly  |          |          |          |          |          |
| Exchange Rat |          |          |          |          |          |
| es: R\$/US\$ |          |          |          |          |          |
+--------------+----------+----------+----------+----------+----------+
| Month/Year   | 2003     | 2004     | 2005     | \%       | \%       |
|              |          |          |          | Change   | Change   |
|              |          |          |          | 03/04    | 04/05    |
+--------------+----------+----------+----------+----------+----------+
| Jan          | 3.438    | 2.851    | 2.692    | -17.07   | -5.58    |
+--------------+----------+----------+----------+----------+----------+
| Feb          | 3.590    | 2.930    | 2.597    | -18.38   | -11.37   |
+--------------+----------+----------+----------+----------+----------+
| Mar          | 3.446    | 2.905    | 2.704    | -15.70   | -6.92    |
+--------------+----------+----------+----------+----------+----------+
| Apr          | 3.118    | 2.905    | 2.585    | -6.83    | -11.02   |
+--------------+----------+----------+----------+----------+----------+
| May          | 2.955    | 3.100    |          | 4.91     |          |
+--------------+----------+----------+----------+----------+----------+
| Jun          | 2.882    | 3.128    |          | 8.54     |          |
+--------------+----------+----------+----------+----------+----------+
| Jul          | 2.879    | 3.036    |          | 5.45     |          |
+--------------+----------+----------+----------+----------+----------+
| Aug          | 3.002    | 3.002    |          | 0.00     |          |
+--------------+----------+----------+----------+----------+----------+
| Sep          | 2.922    | 2.890    |          | -1.10    |          |
+--------------+----------+----------+----------+----------+----------+
| Oct          | 2.861    | 2.852    |          | -0.31    |          |
+--------------+----------+----------+----------+----------+----------+
| Nov          | 2.913    | 2.785    |          | -4.39    |          |
+--------------+----------+----------+----------+----------+----------+
| Dec          | 2.924    | 2.717    |          | -7.08    |          |
+--------------+----------+----------+----------+----------+----------+
| Average      | 3.078    | 2.925    |          | -4.95    |          |
+--------------+----------+----------+----------+----------+----------+
| Source:      |          |          |          |          |          |
| Banco        |          |          |          |          |          |
| Central do   |          |          |          |          |          |
| Brasil       |          |          |          |          |          |
| (www         |          |          |          |          |          |
| .bcb.gov.br) |          |          |          |          |          |
+--------------+----------+----------+----------+----------+----------+

## 

## D. Policy Table

+-------------+-------------+-------------+-------------+-------------+
| ####### O   |             |             |             |             |
| fficial Min |             |             |             |             |
| imum Prices |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Product     | 2003/04     |             | 2002/03     |             |
| (Unit) /    |             |             |             |             |
| Crop Year   |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Area        | R\$         | US\$        | R\$         | US\$        |
+-------------+-------------+-------------+-------------+-------------+
| Cotton (15  |             |             |             |             |
| kg)         |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| S, SE, CW & | 44.60       | 14.53       | 33.90       | 11.61       |
| BA south    |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| NE (except  | 44.60       | 14.53       | 33.90       | 11.61       |
| BA)         |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Cottonseed  |             |             |             |             |
| (15 kg)     |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| S, SE, CW & | 13.40       | 4.36        | 10.08       | 3.45        |
| BA south    |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| NE (except  | 13.40       | 4.36        | 10.08       | 3.45        |
| BA)         |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Soybeans    |             |             |             |             |
| (60 kg)     |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| S, SE, CW & | 14.00       | 4.56        | 11.00       | 3.77        |
| RO          |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| N (except   | 13.00       | 4.56        | 10.40       | 3.56        |
| RO) & NE    |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Source:     |             |             |             |             |
| Ministry of |             |             |             |             |
| A           |             |             |             |             |
| griculture, |             |             |             |             |
| CONAB       |             |             |             |             |
|             |             |             |             |             |
| Note:       |             |             |             |             |
| S=South;    |             |             |             |             |
| SE          |             |             |             |             |
| =Southeast; |             |             |             |             |
| CW=C        |             |             |             |             |
| enter-West; |             |             |             |             |
| NE          |             |             |             |             |
| =Northeast; |             |             |             |             |
| CS=Ce       |             |             |             |             |
| nter-South; |             |             |             |             |
| BA=Bahia;   |             |             |             |             |
| MT=Mato     |             |             |             |             |
| Grosso;     |             |             |             |             |
| TO          |             |             |             |             |
| =Tocantins; |             |             |             |             |
| PA=Para;    |             |             |             |             |
| PI=Piaui;   |             |             |             |             |
| GO=Goias;   |             |             |             |             |
| AC=Acre;    |             |             |             |             |
| R           |             |             |             |             |
| O=Rondonia; |             |             |             |             |
| M           |             |             |             |             |
| A=Maranhao; |             |             |             |             |
| DF=         |             |             |             |             |
| Distrito    |             |             |             |             |
| Federal.    |             |             |             |             |
|             |             |             |             |             |
| Exchange    |             |             |             |             |
| Rate:       |             |             |             |             |
| 1997/98-R\$ |             |             |             |             |
| 1.065/US\$; |             |             |             |             |
| 1998/99-R\  |             |             |             |             |
| $1,15/US\$; |             |             |             |             |
| 1999/00-1   |             |             |             |             |
| .83R\$/US\$ |             |             |             |             |
| ;2000/01-R\ |             |             |             |             |
| $1.85/US\$; |             |             |             |             |
| 2001/02-R\  |             |             |             |             |
| $2.35/US\$; |             |             |             |             |
| 2002/03-R\  |             |             |             |             |
| $2.92/US\$; |             |             |             |             |
| 2003/04-R   |             |             |             |             |
| \$3.07/US\$ |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+

## NARRATIVE ON SUPPLY, DEMAND, POLICY & MARKETING

# Production

**2004/05 Crop Situation**

This year's drought conditions took a crop positioned to set record
yields and turned it into a simply a good one overall. Similar setbacks
suffered last crop year were repeated, including drought in the south
and overabundant moisture in the center-west that caused harvesting
difficulties and shriveled beans. However, this year's rust management
was much improved from that of the previous year, and did not affect
yields to the same degree. Most injury to the crop is limited to
isolated areas; with the exception of Rio Grande do Sul, where
irreversible damage appears to be widespread throughout the state.
Post's current production estimate is 54.5 MT with expected average
overall yields of 2.5 tons/ha. The area projection is 22.8 million
hectares, a 6.5% increase over last year's area.

**2004/05 Crop Estimates by State Mato Grosso**

Rainfall during the month of March, at the end of the harvest, created
some logistical and agronomic problems in certain areas of Mato Grosso.
With rainfall at a 30-year high of 400 millimeters, some producers faced
problems with excess humidity in the beans and higher transportation
costs. The major soybean-producing regions of Sinop (500 kilometers
north of Cuiabá) and Sorriso (420 kilometers North of Cuiabá) were
reporting some diminished yields due to the beans' prolonged exposure to
humidity. Trucking costs were reported 25% higher due to the bad road
conditions, and wet weather during some of the harvest caused mud,
holes, treacherous conditions, and long waits. In a particularly bad
state were large portions of BR 163 (Cuiabá-Santarem) and BR 364
(Diamantino- Itamaraty).

In most areas, however, the rain delayed the harvest without
compromising quality of the beans. Overall, yields in the largest
soybean state of Mato Grosso are still exceptional due to better rust
and crop management and will likely reach a record-breaking 17.9 MMT.
Yields in Mato Grosso continue to lead the country and are anticipated
to be 3.0 tons/ha, making it the first state to reach this level of
average yields.

**Other Center-West**

Despite reports of lower productivity in the Southeast of the state,
which includes the Rio Verde area, production in Goias is expected to

increase 10% over last year. Yields in the west of the state,
particularly in the Catalao region have been excellent. Mato Grosso do
Sul was affected by drought conditions and expected production for the
state fell from 5.3 to 4 MMT, which will still be an increase over last
year's production. Producers in this state with losses greater than 40%
will qualify for debt renegotiation with the Bank of Brazil.

**South**

The worst drought in over 40 years in Southern Brazil has caused a major
impact on soybean production in the southern state of Rio Grande do Sul,
and a considerable one on production in Paraná. These states each
contain approximately one-sixth of Brazilian soybean area. Post's
pre-drought forecast for Rio Grande do Sul was 9.3 MMT, and post's new
estimate for Rio Grande do Sul is 3.0 MMT. Most sources report the
state\'s soy losses at 65%, a 6 MMT commodity loss. The loss in
Paraná\'s production is estimated at 15%, and its estimate is being
lowered from a pre-drought 12.4 MMT to 10.2 MMT due to losses
concentrated in the western and northwestern regions of the state.
Soybeans planted on sandier soils in Northeast Paraná were also
affected.

The drought's most damaging effects took place in February, with its
combination of dryness and higher than average temperatures right at the
time of flowering. Most injury to the crop is limited to isolated areas;
with the exception of Rio Grande do Sul, where irreversible damage
appears to be widespread throughout the state. Although details are not
known, it is reported that producers in the state will receive federal
assistance to compensate their losses.

With respect to average yields, Rio Grande do Sul is the most damaged
and reports from the fields indicate a yield for 04/05 of 0.85 tons per
hectare. Parana so far has averaged 2.65 tons/ha (which may mean an
increase from last year's yields of 2.55 kg/ha), and yields in

Santa Catarina should be only moderately affected at 2.5 tons/ha, down
slightly from their 5-year average of 2.6. The harvest in this region
will be completed by the 15^th^ of May.

**Southeast**

Minas Gerais and Sao Paulo will together produce 5.3 MMT this year. The
soybean harvest is complete in the state of Sao Paulo, where production
numbers was affected as much as 5% due to the drought conditions in
February. Minas Gerais has reported excellent yields in the Minas
Triangle and, in particular, in Unaí. The two states will produce 5.1
MMT this year, which, despite losses, is still an increase over last
year's production.

**Northeast**

Production is expected to reach at least 4 MMT in Bahia, Maranhao, and
Piaui combined. Harvest progress in this area is advancing rapidly but
not without complications. Unlike other years, this year nearly all
producers in Bahia planted at the same time due to late rains, and now
machinery and transport is at a premium. Maranhao and Piaui have
harvested surprisingly high yields so far, although rains delayed the
harvest to some degree in Maranhao. Even fields producing for the first
year in these two states show high yields.

**North**

With the harvest now complete in the North, all five states in the
region increased production in 04/05. Although some areas were
complicated by rain during harvest, which especially affected those who
planted late in the season, productivity is still up considerably over
last year. Producers in the region benefited from careful fertilizer and
leaf mulch applications, as well as by good control of soy rust. The
entire area will produce 1.2 MMT of soybeans, lead by Tocantins, which
is expected to produce at least 800,000 MT and has reported likely
average yields of 2.8 MT per hectare for the state.

**2005/06 Crop Outlook**

Soybean area is forecast to increase 4 percent next crop year to 23.8
million hectares. Growth in area is expected to continue in the
Center-West, Bahia, and in other expansion areas to the North. In the
South, however, the same area should be maintained due to less available
land for expansion and the discouraging soybean situation in the region
over the last two years. Local media have reported a minor amount of
shifting into rice and horticultural crops in this area.

The current overall trend of high input costs and low prices is expected
to discourage farmers in general from expanding at the rates that took
place in the past three years. The strength of the Brazilian currency,
the Real, has also decreased Agricultural exports competitiveness in
general, in addition to decreasing margins. The potential impact of
soybean rust in the U.S. is one of the few variables that could cause a
market upswing in Brazil's favor and trigger a greater growth in area
planted.

Post forecasts 05/06 production at 59 MMT, with average yields of 2.5
tons per hectare, assuming that weather problems will be less of an
issue next crop year. Decreasing losses to rust and overall good crop
management will continue as high costs and low soybean prices force
soybean production out of small producers' hands and into those of large
farming conglomerations.

Production should benefit from the changes to Brazilian Biotechnology
policy in 05/06. The state of Paraná is the one exception, where the
state's governor maintains his zero-tolerance position on biotech
production and for all shipments out of the state's port, Paranaguá.
However, It is unclear at this time how he will be able to override
federal law. Since this major port is also used to transport soybeans
out of neighboring states, the policy has had a big impact on RR soybean
production in the south.

<table style="width:100%;">
<colgroup>
<col style="width: 18%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 7%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><p
id="official-brazilian-government-soybean-area-production-yield-estimates"
class="heading">Official Brazilian Government Soybean Area, Production,
&amp; Yield Estimates</p></td>
</tr>
<tr class="even">
<td></td>
<td colspan="3">AREA (1000 ha)</td>
<td colspan="3">Production (1000 t)</td>
<td colspan="3">Yield (kg/ha)</td>
</tr>
<tr class="odd">
<td>State/Crop Year</td>
<td>02/03</td>
<td>03/04</td>
<td>% Var.</td>
<td>02/03</td>
<td>03/04</td>
<td>% Var.</td>
<td>02/03</td>
<td>03/04</td>
<td>% Var.</td>
</tr>
<tr class="even">
<td><strong>North</strong></td>
<td><strong>209.7</strong></td>
<td><strong>336.1</strong></td>
<td><strong>60.3</strong></td>
<td><strong>557.5</strong></td>
<td><strong>910.6</strong></td>
<td><strong>63.3</strong></td>
<td><strong>2,659.0</strong></td>
<td><strong>2,709.0</strong></td>
<td><strong>1.9</strong></td>
</tr>
<tr class="odd">
<td>Roraima</td>
<td>3.0</td>
<td>5.6</td>
<td>86.7</td>
<td>7.2</td>
<td>13.4</td>
<td>86.1</td>
<td>2,400.0</td>
<td>2,400.0</td>
<td></td>
</tr>
<tr class="even">
<td>Rondônia</td>
<td>41.0</td>
<td>59.5</td>
<td>45.0</td>
<td>123.0</td>
<td>178.5</td>
<td>45.1</td>
<td>3,000.0</td>
<td>3,000.0</td>
<td></td>
</tr>
<tr class="odd">
<td>Amazonas</td>
<td>2.1</td>
<td>2.1</td>
<td></td>
<td>5.4</td>
<td>5.4</td>
<td></td>
<td>2,571.0</td>
<td>2,571.0</td>
<td></td>
</tr>
<tr class="even">
<td>Pará</td>
<td>15.5</td>
<td>26.8</td>
<td>73.0</td>
<td>44.2</td>
<td>76.6</td>
<td>73.3</td>
<td>2,850.0</td>
<td>2,860.0</td>
<td>0.4</td>
</tr>
<tr class="odd">
<td>Tocantins</td>
<td>148.1</td>
<td>242.1</td>
<td>63.5</td>
<td>377.7</td>
<td>636.7</td>
<td>68.6</td>
<td>2,550.0</td>
<td>2,630.0</td>
<td>3.1</td>
</tr>
<tr class="even">
<td><strong>Northeast</strong></td>
<td><strong>1,240.7</strong></td>
<td><strong>1,326.8</strong></td>
<td><strong>6.9</strong></td>
<td><strong>2,519.3</strong></td>
<td><strong>3,726.0</strong></td>
<td><strong>47.9</strong></td>
<td><strong>2,031.0</strong></td>
<td><strong>2,808.0</strong></td>
<td><strong>38.3</strong></td>
</tr>
<tr class="odd">
<td>Maranhão</td>
<td>274.0</td>
<td>342.5</td>
<td>25.0</td>
<td>654.9</td>
<td>1,061.8</td>
<td>62.1</td>
<td>2,390.0</td>
<td>3,100.0</td>
<td>29.7</td>
</tr>
<tr class="even">
<td>Piauí</td>
<td>116.3</td>
<td>162.8</td>
<td>40.0</td>
<td>308.2</td>
<td>446.1</td>
<td>44.7</td>
<td>2,650.0</td>
<td>2,740.0</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td>Bahia</td>
<td>850.4</td>
<td>821.5</td>
<td>-3.4</td>
<td>1,556.2</td>
<td>2,218.1</td>
<td>42.5</td>
<td>1,830.0</td>
<td>2,700.0</td>
<td>47.5</td>
</tr>
<tr class="even">
<td><strong>Center-West</strong></td>
<td><strong>8,048.4</strong></td>
<td><strong>9,526.4</strong></td>
<td><strong>18.4</strong></td>
<td><strong>23,532.5</strong></td>
<td><strong>24,841.5</strong></td>
<td><strong>5.6</strong></td>
<td><strong>2,924.0</strong></td>
<td><strong>2,608.0</strong></td>
<td><strong>-10.8</strong></td>
</tr>
<tr class="odd">
<td>Mato Grosso</td>
<td>4,419.6</td>
<td>5,148.8</td>
<td>16.5</td>
<td>12,949.4</td>
<td>14,519.6</td>
<td>12.1</td>
<td>2,930.0</td>
<td>2,820.0</td>
<td>-3.8</td>
</tr>
<tr class="even">
<td>Mato Grosso do Sul</td>
<td>1,415.1</td>
<td>1,768.9</td>
<td>25.0</td>
<td>4,103.8</td>
<td>3,357.4</td>
<td>-18.2</td>
<td>2,900.0</td>
<td>1,898.0</td>
<td>-34.6</td>
</tr>
<tr class="odd">
<td>Goiás</td>
<td>2,170.5</td>
<td>2,561.2</td>
<td>18.0</td>
<td>6,359.6</td>
<td>6,841.0</td>
<td>7.6</td>
<td>2,930.0</td>
<td>2,671.0</td>
<td>-8.8</td>
</tr>
<tr class="even">
<td>Distrito Federal</td>
<td>43.2</td>
<td>47.5</td>
<td>10.0</td>
<td>119.7</td>
<td>123.5</td>
<td>3.2</td>
<td>2,770.0</td>
<td>2,600.0</td>
<td>-6.1</td>
</tr>
<tr class="odd">
<td><strong>Southeast</strong></td>
<td><strong>1,488.9</strong></td>
<td><strong>1,698.0</strong></td>
<td><strong>14.0</strong></td>
<td><strong>4,067.6</strong></td>
<td><strong>4,333.7</strong></td>
<td><strong>6.5</strong></td>
<td><strong>2,732.0</strong></td>
<td><strong>2,552.0</strong></td>
<td><strong>-6.6</strong></td>
</tr>
<tr class="even">
<td>Minas Gerais</td>
<td>873.6</td>
<td>1,039.6</td>
<td>19.0</td>
<td>2,332.5</td>
<td>2,700.9</td>
<td>15.8</td>
<td>2,670.0</td>
<td>2,598.0</td>
<td>-2.7</td>
</tr>
<tr class="odd">
<td>São Paulo</td>
<td>615.3</td>
<td>658.4</td>
<td>7.0</td>
<td>1,735.1</td>
<td>1,632.8</td>
<td>-5.9</td>
<td>2,820.0</td>
<td>2,480.0</td>
<td>-12.1</td>
</tr>
<tr class="even">
<td><strong>South</strong></td>
<td><strong>7,487.1</strong></td>
<td><strong>8,232.6</strong></td>
<td><strong>10.0</strong></td>
<td><strong>21,340.6</strong></td>
<td><strong>16,376.4</strong></td>
<td><strong>-23.3</strong></td>
<td><strong>2,850.0</strong></td>
<td><strong>1,989.0</strong></td>
<td><strong>-30.2</strong></td>
</tr>
<tr class="odd">
<td>Paraná</td>
<td>3,637.6</td>
<td>3,990.4</td>
<td>9.7</td>
<td>10,971.0</td>
<td>10,215.4</td>
<td>-6.9</td>
<td>3,016.0</td>
<td>2,560.0</td>
<td>-15.1</td>
</tr>
<tr class="even">
<td>Santa Catarina</td>
<td>255.8</td>
<td>289.1</td>
<td>13.0</td>
<td>738.5</td>
<td>634.6</td>
<td>-14.1</td>
<td>2,887.0</td>
<td>2,195.0</td>
<td>-24.0</td>
</tr>
<tr class="odd">
<td>Rio Grande do Sul</td>
<td>3,593.7</td>
<td>3,953.1</td>
<td>10.0</td>
<td>9,631.1</td>
<td>5,526.4</td>
<td>-42.6</td>
<td>2,680.0</td>
<td>1,398.0</td>
<td>-47.8</td>
</tr>
<tr class="even">
<td>North/Northeast</td>
<td>1,450.4</td>
<td>1,662.9</td>
<td>14.7</td>
<td>3,076.8</td>
<td>4,636.6</td>
<td>50.7</td>
<td>2,121.0</td>
<td>2,788.0</td>
<td>31.4</td>
</tr>
<tr class="odd">
<td>Center-South</td>
<td>17,024.4</td>
<td>19,457.0</td>
<td>14.3</td>
<td>48,940.7</td>
<td>45,551.6</td>
<td>-6.9</td>
<td>2,857.0</td>
<td>2,341.0</td>
<td>-18.6</td>
</tr>
<tr class="even">
<td><strong>Brasil</strong></td>
<td><strong>18,474.8</strong></td>
<td><strong>21,119.9</strong></td>
<td><strong>14.3</strong></td>
<td><strong>52,017.5</strong></td>
<td><strong>50,188.2</strong></td>
<td><strong>-3.5</strong></td>
<td><strong>2,816.0</strong></td>
<td><strong>2,376.0</strong></td>
<td><strong>-15.6</strong></td>
</tr>
</tbody>
</table>

Source: Conab (www.conab.gov.br)

# Area

Post estimates harvested area at 22.8 million hectares, a 7 percent
increase over last year. Although Brazilian farmers are experiencing
increasing costs of production and lower market prices, expansion of
crop land into soybeans continues in the frontier areas of Northeastern
Mato Grosso, Tocantins, and Pará. A recent post trip to expansion areas
revealed that the land-clearing process goes on despite lower soybean
and cattle prices. While many farmers are still clearing cerrado or
forested lands for pasture, it would appear that the majority of farmers
are now planting only a crop of rice first or simply going directly to
soybeans. As the remaining available land in Northern Mato Grosso
continues to be purchased at a rapid pace, increasing land values have
pushed soybean production into the new frontier areas of Pará, Piauí,
Tocantins, and Rondónia, areas with more affordable land prices and
lower transportation costs due to port options such as Santarém and
Itacotiara.

In the south, there are a few farmers who are moving out of soybeans and
into horticultural crops such as bananas, peach, tangerine, pineapple,
and grapes. On the flip side, there is a state program in southern Rio
Grande do Sul to incorporate soybeans into their rice and corn
rotations, and Paraná's production should be helped by the Biosafety law
that liberated the planting of Roundup Ready seed for next year's
harvest. At this point, no reduction in soybean production in the South
is foreseen, despite decreasing returns.

## Yields

2004/05 crop yields are expected to average approximately 2.5 metric
tons per hectare, a slight improvement from last year's average of 2.45,
but shy of the record of 2.82 set in 2002/03. Yields in the center-west
area of Mato Grosso and Goias are expected excellent. Yields in Mato
Grosso continue to lead the country and are anticipated to reach 3.0
tons/ha, making it the first state to reach this average yield. Post's
trip to this area confirmed the excellent crop management in these
areas, a reflection of lessons learned from last year's rust losses. In
the face of rising production costs, farmers are also looking for
innovative ways to improve yields. These methods include the use of
cheaper natural forms of phosphate, potassium sulfate, lime, and bone
meal. However, farmers in the region appear to have invested in
fertilizer and pesticide applications and the crops are in excellent
condition.

Rio Grande do Sul was the most damaged this year and is projected at
0.85 tons per hectare. Parana will decrease to 2.5 tons/ha (only a
slight decrease from last year's yields of 2.55 kg/ha), and yields in
Santa Catarina were only moderately affected at 2.5 tons/ha, down
slightly from their 5-year average of 2.6. Overall, post estimates
soybean yields in Brazil to average 2.5 tons/ha.

Overall yields in Brazil continue to improve due to the intensive
region-specific research programs. The high-quality seed and technical
services in Brazil continue to receive international recognition. The
Mato Grosso Foundation has created a successful program that sponsors
over 30 field days and 40 technical meetings in agricultural centers
across the state. The latest technology and procedures for managing rust
and other diseases are extended to farmers at crucial periods during the
crop season.

## 

## Soybean Rust

Now in its fourth year of struggling with rust, Brazilian farmers seem
to be managing the disease better and are more assiduous in their
preventative spraying. This crop year, rust was present in every major
soy-producing area, encompassing 12 states plus the federal district and
401 municipalities. The state of Paraná, number two in Brazilian soy
area, suffered the greatest number of rust outbreaks.

Soybean Rust, which can destroy up to 80 percent of a crop if left
untreated, has significantly raised production costs for farmers at a
time when profit margins are already narrowing because of the drop in
international prices and increases in the costs of other inputs. To keep
the disease in check, farmers must apply fungicides to the crop at least
two to three times, raising production costs by as much as 15 percent.
Last season, when heavy rainfall in parts of Brazil exacerbated the rust
epidemic, the country\'s soybean output fell for the first time in five
years. Over all, the fungus lowered production by 4.5 million tons last
season, costing farmers \$2 billion.

+-----------------+----------------+----------------+----------------+
| ######### Bra   |                |                |                |
| zil's Losses du |                |                |                |
| e to Asian Rust |                |                |                |
|                 |                |                |                |
| (1,000 tons and |                |                |                |
| 1 million U.S.  |                |                |                |
| dollars)        |                |                |                |
+-----------------+----------------+----------------+----------------+
|                 | **2001/02**    | **2002/03**    | **2003/04**    |
+-----------------+----------------+----------------+----------------+
| #######         | 570            | 3,350          | 4,590          |
| Production Loss |                |                |                |
+-----------------+----------------+----------------+----------------+
| Financial Loss  | 125            | 734            | 1,225          |
+-----------------+----------------+----------------+----------------+
| Agrochemical    | \-             | 442            | 860            |
| Costs           |                |                |                |
+-----------------+----------------+----------------+----------------+
| **Total         | **\$125**      | **\$1,176.4**  | **\$2,085**    |
| Financial       |                |                |                |
| Loss**          |                |                |                |
+-----------------+----------------+----------------+----------------+

In an effort to lower agrochemical costs, the soybean industry has been
pressuring the government for the speedy registration of more fungicides
to combat soybean rust. To register any fungicide for use in Brazil, the
industry must go through three government entities. The request is filed
with the Ministry of Agriculture, but also goes to the Ministry of
Science for toxicological studies and the Ministry of the Environment
for environmental impact studies. Since February, the number of
fungicides approved by the Brazilian government for use has risen from
14 to 20, and approximately 15 to 20 more products are waiting for
government approval.

Since soybean rust arrived in the United States last December,
university and government crop specialists and rust teams have been
visiting Brazil in increasing numbers from the U.S. to observe soybean
rust in the field and learn to better identify it. These groups have
visited many types of farms and had the chance to view the disease in
several stages, in order to more easily identify the disease in the U.S.
Americans are also learning about Rust management from the Brazilians,
trying to learn from their mistakes in previous years.

The Mato Grosso Foundation is currently researching conventional
rust-resistant seed, but progress is slow and its launch is not expected
for 4-5 years.

# Consumption

+------------+-------+-------+-------+----+------+------+------+----+
| ###        |       |       |       |    |      |      |      |    |
| #### Insta |       |       |       |    |      |      |      |    |
| lled Soybe |       |       |       |    |      |      |      |    |
| an Crush a |       |       |       |    |      |      |      |    |
| nd Refinin |       |       |       |    |      |      |      |    |
| g Capacity |       |       |       |    |      |      |      |    |
|  by State: |       |       |       |    |      |      |      |    |
|  2001-2003 |       |       |       |    |      |      |      |    |
+------------+-------+-------+-------+----+------+------+------+----+
| ###        | Crush |       |       |    | Refi |      |      |    |
| #### State | Cap   |       |       |    | ning |      |      |    |
|            | acity |       |       |    | Capa |      |      |    |
|            |       |       |       |    | city |      |      |    |
+------------+-------+-------+-------+----+------+------+------+----+
|            | 2001  | 2002  | 2003  | Va | 2001 | 2002 | 2003 | Va |
|            |       |       |       | r. |      |      |      | r. |
|            |       |       |       | %  |      |      |      | %  |
+------------+-------+-------+-------+----+------+------+------+----+
| Paraná     | 3     | 2     | 2     | 1  | 2    | 2    | 2    | 6  |
|            | 1,500 | 8,650 | 8,950 |    | ,730 | ,490 | ,650 |    |
+------------+-------+-------+-------+----+------+------+------+----+
| Rio Grande | 1     | 2     | 2     | 0  | 1    | 1    | 1    | -9 |
| do Sul     | 9,000 | 0,150 | 0,100 |    | ,860 | ,890 | ,720 |    |
+------------+-------+-------+-------+----+------+------+------+----+
| Mato       | 1     | 1     | 1     | 0  | 600  | 650  | 650  | 0  |
| Grosso     | 0,820 | 4,500 | 4,500 |    |      |      |      |    |
+------------+-------+-------+-------+----+------+------+------+----+
| São Paulo  | 1     | 1     | 1     | 12 | 6    | 5    | 5    | 1  |
|            | 4,700 | 2,950 | 4,450 |    | ,256 | ,840 | ,880 |    |
+------------+-------+-------+-------+----+------+------+------+----+
| Goiás      | 8,660 | 9,060 | 1     | 14 | 1    | 1    | 1    | 3  |
|            |       |       | 0,320 |    | ,420 | ,570 | ,610 |    |
+------------+-------+-------+-------+----+------+------+------+----+
| Mato       | 7,330 | 6,630 | 6,980 | 5  | 490  | 540  | 540  | 0  |
| Grosso do  |       |       |       |    |      |      |      |    |
| Sul        |       |       |       |    |      |      |      |    |
+------------+-------+-------+-------+----+------+------+------+----+
| Minas      | 5,750 | 6,450 | 6,350 | -2 | 1    | 1    | 1    | 0  |
| Gerais     |       |       |       |    | ,050 | ,270 | ,270 |    |
+------------+-------+-------+-------+----+------+------+------+----+
| Bahia      | 5,200 | 5,460 | 5,460 | 0  | 570  | 970  | 880  | -9 |
+------------+-------+-------+-------+----+------+------+------+----+
| Santa      | 4,130 | 4,050 | 4,000 | -1 | 530  | 530  | 530  | 0  |
| Catarina   |       |       |       |    |      |      |      |    |
+------------+-------+-------+-------+----+------+------+------+----+
| Amazonas   | \-    | 2,000 | 2,000 | 0  | \-   | \-   | \-   | 0  |
+------------+-------+-------+-------+----+------+------+------+----+
| Pernambuco | 400   | 400   | 400   | 0  | 500  | 500  | 450  | -  |
|            |       |       |       |    |      |      |      | 10 |
+------------+-------+-------+-------+----+------+------+------+----+
| Piaui      | 260   | 260   | 1,760 | 5  | 120  | 120  | 120  | 0  |
|            |       |       |       | 77 |      |      |      |    |
+------------+-------+-------+-------+----+------+------+------+----+
| Ceara      | 200   | \-    | \-    | 0  | 42   | \-   | \-   | 0  |
+------------+-------+-------+-------+----+------+------+------+----+
| Distrito   | \-    | \-    | \-    | 0  | \-   | \-   | \-   | 0  |
| Federal    |       |       |       |    |      |      |      |    |
+------------+-------+-------+-------+----+------+------+------+----+
| Total      | 10    | 11    | 11    | 4  | 16   | 16   | 16   | 0  |
|            | 7,950 | 0,560 | 5,270 |    | ,168 | ,370 | ,300 |    |
+------------+-------+-------+-------+----+------+------+------+----+

Source: Brazilian Oilseed Crushers Association -- ABIOVE
(www.abiove.com.br)

[]{#__RefHeading___Toc102369009 .anchor}**Loss**

According to IBGE (Brazilian institute of statistics), in 2003 3.5
million MT - nearly 7%- of their estimated 51.5 million MT harvest was
lost in post-harvest. Their study concluded that between 1996 and 2003,
81.5 million tons of grain have been lost in the pre and post harvest
processes, with 53.3 million MT of this total being post-harvest product
loss. According to IBGE, this loss primarily takes place during
transport, in which 67% is carried out by truck. The remaining
post-harvest loss occurs in the storage process. Outdated grain silos,
sometimes without fans, cause loss due to humidity and insect
infestation. And the insufficient storage area means that approximately
5% of stocks are in open-air piles on farm. Along with other losses that
occur with storing beans outside includes the crusting of the outer
layer of the pile due to weather exposure[]{#__RefHeading___Toc102369010
.anchor}.

**Trade**

Decreasing internal and external prices, lower crushing margins, and
weak international demand caused Brazilian exports to fall in 2004/05 to
19,300 tons. Total Brazilian exports of the soy complex totaled \$570
million, down 36% from October of 2003. Export growth began to slow in
April, when numerous shipments of soybeans were rejected by China due to
fungicide contamination, which Brazilian producers argued was an attempt
to get out of contracts negotiated at higher prices. At that point,
farmers began to lose confidence that they would be paid for their
commodity sent to China, and soon after, prices that were at \$10 a
bushel dropped to \$5. Exports to China, Brazil's largest market, have
dropped 21% to \$5.9 billion in the past year. The fall in exports to
China is an about-face from previous years, where over the period from
1999-2003 the value of Brazil's exports to China jumped from 620
thousand tons to 6.1 million tons.

Problems with shipping continue in Brazil. According to industry
sources, there are fewer and fewer ships available, trucking is more
expensive, and there are new regulations at the port of Paranaguá.
Charges for demurrage have increased from \$10,000 to \$40,000 a day.
Overtime has been temporarily suspended for port workers and port
premiums continue to be in jeopardy.

Appreciation of the Brazilian currency (currently at R\$2.5 to the
dollar) is another concern for 2004/05 exports. Some industry sources
question if Brazilian soy producers can maintain profit margins with the
combination of current international soy prices and the current exchange
rate. Producers claim they need at last R\$ 3.0 to the US dollar to
remain competitive at current prices. After several years of enjoying
the benefits of a weak currency, Brazilian farmers now are getting hit
by a combination of low commodity prices and a strengthened Real.

The Brazilian real\'s value has strengthened by 20 pct against the U.S.
dollar since July 2004 as a result of good performance in Brazil\'s
manufacturing and export sectors. This has coincided with a sharp
decline in the value of soybeans in the export market. The result has
been a double shock to Brazilian producers in terms of the reals they
receive for their commodities. A year ago Brazilian farmers were getting
about 800 reals for each ton of soybeans delivered to the ports. Today
they will only receive about 560 reals, a decline of 30 pct. About
one-third of the decline in farmers\' receipts is attributable to the
rise in the value of the real.

Many Brazilian farmers and ranchers are likely to lose money for the
first time in a long time because of the current situation. The high
cost of capital is another factor hurting farmers. The base interest
rate in Brazil currently is 19.25 percent, which makes it difficult to
borrow money at that rate and make money under good circumstances, and
even more difficult under the current conditions for soybean farming,
and causes a question regarding the increase in next year's soybean
area. If interest rates remain at current levels, a major inflow of
capital into Brazil is expected, which will keep the real strong, and
will cause the difficult financial situation for farmers to continue.

+-----------------+-----------------+-----------------+-----------------+
| ######### Soy   |                 |                 |                 |
| beans: Rising P |                 |                 |                 |
| roduction Costs |                 |                 |                 |
|                 |                 |                 |                 |
| **(Cost of      |                 |                 |                 |
| Production in   |                 |                 |                 |
| western         |                 |                 |                 |
| Paraná\* state  |                 |                 |                 |
| per hectare in  |                 |                 |                 |
| USD)**          |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
|                 | 2003/04         | 2004/05         | Increase        |
+-----------------+-----------------+-----------------+-----------------+
| Agrochemicals   | 142.97          | 155.28          | 9%              |
+-----------------+-----------------+-----------------+-----------------+
| Fertilizer      | 61.49           | 73.65           | 20%             |
+-----------------+-----------------+-----------------+-----------------+
| Machinery       | 38.24           | 39.01           | 2%              |
| Operations      |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Seed            | 19.59           | 30.94           | 58%             |
+-----------------+-----------------+-----------------+-----------------+
| Interest        | 14.38           | 16.31           | 13%             |
+-----------------+-----------------+-----------------+-----------------+
| Transportation  | 10.98           | 12.57           | 14%             |
+-----------------+-----------------+-----------------+-----------------+
| Insurance       | 8.53            | 9.10            | 7%              |
+-----------------+-----------------+-----------------+-----------------+
| Rec             | 8.02            | 8.02            | 0%              |
| eiving/Drying/C |                 |                 |                 |
| leaning/Storage |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Technical       | 5.39            | 6.15            | 14%             |
| Assistance      |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| General         | 5.29            | 6.03            | 14%             |
| Expenses        |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Maintenance     | 1.59            | 1.73            | 9%              |
+-----------------+-----------------+-----------------+-----------------+
| Temporary Labor | .71             | .87             | 2%              |
+-----------------+-----------------+-----------------+-----------------+

+----------------+----------------+------------------+----------------+
| **Relative     |                |                  |                |
| Swap Value of  |                |                  |                |
| Soybeans for   |                |                  |                |
| Inputs (60kg   |                |                  |                |
| bags per unit  |                |                  |                |
| 1/)**          |                |                  |                |
+----------------+----------------+------------------+----------------+
| Year           | Fertilizer     | Harvester        | Tractor        |
+----------------+----------------+------------------+----------------+
| 1994           | 20.1           | 6487             | 2328           |
+----------------+----------------+------------------+----------------+
| 1995           | 23.3           | 7698             | 2727           |
+----------------+----------------+------------------+----------------+
| 1996           | 20.9           | 5091             | 1901           |
+----------------+----------------+------------------+----------------+
| 1997           | 18.5           | 5044             | 1745           |
+----------------+----------------+------------------+----------------+
| 1998           | 22.7           | 6427             | 2078           |
+----------------+----------------+------------------+----------------+
| 1999           | 26.9           | 7355             | 2163           |
+----------------+----------------+------------------+----------------+
| 2000           | 25.4           | 7059             | 1960           |
+----------------+----------------+------------------+----------------+
| 2001           | 23.4           | 6543             | 1783           |
+----------------+----------------+------------------+----------------+
| 2002           | 17.6           | 4972             | 1310           |
+----------------+----------------+------------------+----------------+
| 2003           | 19.8           | 6177             | 1636           |
+----------------+----------------+------------------+----------------+
| 2004\*         | 22             | 7481             | 1806           |
+----------------+----------------+------------------+----------------+
| 1/ Amount of   |                |                  |                |
| soybeans       |                |                  |                |
| needed to      |                |                  |                |
| acquire one    |                |                  |                |
| metric ton of  |                |                  |                |
| fertilizer,    |                |                  |                |
| one harvester  |                |                  |                |
| (120 Hp), or   |                |                  |                |
| one tractor    |                |                  |                |
| (75 Hp/2X4)    |                |                  |                |
|                |                |                  |                |
| \* Estimates   |                |                  |                |
| based on       |                |                  |                |
| Jan-Nov. 2004  |                |                  |                |
+----------------+----------------+------------------+----------------+

Source: Conab (www.conab.gov.br)

  -------------- -------------- -------------- -------------- -------------
  **Fertilizer                                                
  Supply and                                                  
  Sales (Metric                                               
  Tons)**                                                     

  Item           2002           2003           2004           Change %

  Production     8,071,156      9,353,177      9,783,952      4.61

  Imports        9,772,638      10,491,293     14,679,124     39.92

  Sales          19,114,268     22,796,232     22,767,489     -0.13
  -------------- -------------- -------------- -------------- -------------

Source: National Fertilizer Association
(ANDA)([www.anda.org.br](http://www.anda.org.br/))

+----+----------------+-----------------+------------+--------------+
| #  |                |                 |            |              |
| ## |                |                 |            |              |
| ## |                |                 |            |              |
| ## |                |                 |            |              |
| #  |                |                 |            |              |
| To |                |                 |            |              |
| ta |                |                 |            |              |
| l  |                |                 |            |              |
| Fe |                |                 |            |              |
| rt |                |                 |            |              |
| il |                |                 |            |              |
| iz |                |                 |            |              |
| er |                |                 |            |              |
|  S |                |                 |            |              |
| al |                |                 |            |              |
| es |                |                 |            |              |
|  & |                |                 |            |              |
|  R |                |                 |            |              |
| el |                |                 |            |              |
| at |                |                 |            |              |
| iv |                |                 |            |              |
| e  |                |                 |            |              |
| Co |                |                 |            |              |
| st |                |                 |            |              |
+----+----------------+-----------------+------------+--------------+
| Ye | Quatity 1/     | Soybeans 2/     | Corn 2/    | Sugar Cane   |
| ar |                |                 |            | 3/           |
+----+----------------+-----------------+------------+--------------+
| 20 | 17,069,214     | 18.8            | 42.1       | 17.2         |
| 01 |                |                 |            |              |
+----+----------------+-----------------+------------+--------------+
| 20 | 19,114,268     | 15.6            | 30.8       | 18.2         |
| 02 |                |                 |            |              |
+----+----------------+-----------------+------------+--------------+
| 20 | 22,796,232     | 15.5            | 32.7       | 20.4         |
| 03 |                |                 |            |              |
+----+----------------+-----------------+------------+--------------+
| 20 | 22,767,489     | 17.4            | 42.2       | 26.9         |
| 04 |                |                 |            |              |
+----+----------------+-----------------+------------+--------------+
| 1/ |                |                 |            |              |
| A  |                |                 |            |              |
| ll |                |                 |            |              |
| Co |                |                 |            |              |
| mo |                |                 |            |              |
| di |                |                 |            |              |
| ti |                |                 |            |              |
| es |                |                 |            |              |
| (  |                |                 |            |              |
| me |                |                 |            |              |
| tr |                |                 |            |              |
| ic |                |                 |            |              |
| t  |                |                 |            |              |
| on |                |                 |            |              |
| s) |                |                 |            |              |
+----+----------------+-----------------+------------+--------------+
| 2/ |                |                 |            |              |
| 60 |                |                 |            |              |
| kg |                |                 |            |              |
| ba |                |                 |            |              |
| gs |                |                 |            |              |
| of |                |                 |            |              |
| c  |                |                 |            |              |
| om |                |                 |            |              |
| mo |                |                 |            |              |
| di |                |                 |            |              |
| ty |                |                 |            |              |
| ne |                |                 |            |              |
| ed |                |                 |            |              |
| ed |                |                 |            |              |
| to |                |                 |            |              |
| b  |                |                 |            |              |
| uy |                |                 |            |              |
| 1  |                |                 |            |              |
| me |                |                 |            |              |
| tr |                |                 |            |              |
| ic |                |                 |            |              |
| t  |                |                 |            |              |
| on |                |                 |            |              |
| of |                |                 |            |              |
| f  |                |                 |            |              |
| er |                |                 |            |              |
| ti |                |                 |            |              |
| li |                |                 |            |              |
| ze |                |                 |            |              |
| r. |                |                 |            |              |
+----+----------------+-----------------+------------+--------------+
| 3/ |                |                 |            |              |
| Me |                |                 |            |              |
| tr |                |                 |            |              |
| ic |                |                 |            |              |
| to |                |                 |            |              |
| ns |                |                 |            |              |
| of |                |                 |            |              |
| ca |                |                 |            |              |
| ne |                |                 |            |              |
| ne |                |                 |            |              |
| ed |                |                 |            |              |
| ed |                |                 |            |              |
| to |                |                 |            |              |
| b  |                |                 |            |              |
| uy |                |                 |            |              |
| 1  |                |                 |            |              |
| me |                |                 |            |              |
| tr |                |                 |            |              |
| ic |                |                 |            |              |
| t  |                |                 |            |              |
| on |                |                 |            |              |
| of |                |                 |            |              |
| f  |                |                 |            |              |
| er |                |                 |            |              |
| ti |                |                 |            |              |
| li |                |                 |            |              |
| ze |                |                 |            |              |
| r. |                |                 |            |              |
+----+----------------+-----------------+------------+--------------+

Source: National Fertilizer Association
(ANDA)([www.anda.org.br](http://www.anda.org.br/))

## Financing

Federal funding for the 2004/05 crop year increased by 46 percent from
2003/04 to R\$39.5 billion (US\$ 13 billion). This amount includes
R\$28.8 billion (US\$ 9.5 billion for all programs managed by the
Ministry of Agriculture's Food Supply Agency (CONAB), such as those
under the minimum price policy; and R\$10.7 billion (US\$ 3.4 billion)
for investment programs jointly managed with the National Bank of
Economic and Social Development (BNDES), at subsidized interest rates.
The subsidized credit is offered at an interest rate of 8.75 percent,
which is considerably lower than the market rate of around 20 percent.

Two-year term government credit for soybean producers is available up to
an amount of R\$200,000 (roughly US\$ 70,000) for farmers in the
Center-West and North regions as well as soy producers in Maranhão,
Piaui and Bahia. For all other soy producing states, the limit is
R\$150,000(roughly US\$ 52,000). The subsidized interest employed for
these programs is 8.75% per year. Government financing covers a greater
percent of production in the South, as farm sizes tends to be much
smaller. Medium and large-scale soybean farmers, which dominate the
frontier, depend little on government programs. Multinationals and seed
suppliers provide much of the credit and inputs for larger producers.
Local information indicates that 90 percent of agricultural chemicals
are sold in crop terms (swap), while traders cover about 50 percent of
soybean crop financing. Commercial banks, using the GOB required cash
deposit focused to agriculture with GOB backing, can cover up to 60
percent of soybean producers' needs, while input dealers cover up to
about 25 percent.

In the frontier, land opening costs are much higher and there is a
greater dependence on multinationals. The companies take on the risks
normally associated with banks, however, the value of soybeans has been
literally as strong as gold, thereby encouraging the role as a lender.
Multinationals began financing the soybean crop 8 years ago, largely
through "swaps." This guarantees supply to the industry and allows for
plant operation planning. Furthermore, plants can forward contract sales
of oil and meal, since they have guaranteed supply for roughly 20
percent of production.

**Domestic Support**

The Brazilian government maintains a rural credit system and several
BNDES long-term loan programs that support agricultural production and
farm income, all at subsidized interest rates. These programs are
summarized below:

**1. Government Commodity Loan Program (EGF):**

This program is frequently used by farmers to finance the holding of
their products in accredited warehouses as collateral for the bank
lender. The loan amount is based on the value of product offered as
guarantee, based on a minimum price set annually by the government for
various products. Banks normally provide loans on the basis of 70
percent of the minimum price. Subsidized interest is available at annual
rates of 8.75 percent. The volume of such subsidized credit available is
limited.

**2. EGF-Industry Commodity Loan Program:**

This program is similar to EGF, but applicable only to processors of
agricultural commodities under the Minimum Support Price Program, except
for rice and soybeans. Access to this program is gained directly between
the processor and the farmer or cooperative. Financing is limited to 50
percent of the production capacity of the processors, and payment to the
farmer cannot be lower than the government-established minimum commodity
price in effect. Subsidized interest is available at annual rates of
8.75 percent.

**3. Government Commodity Acquisition Program (AGF):**

This program is similar to EGF and applicable to farmers who sell farm
products to the federal government. Products must be in accredited
warehouses, cleaned, dried and graded. The government, through the
National Food Company (CONAB), an entity of the Ministry of Agriculture
and Food Supply (similar to USDA/CCC) purchases the product at the
minimum price.

**4. Rural Promissory Note (CDR):**

Processors of agricultural commodities can contract a CDR with
accredited banks. Financing is limited to 50 percent of the processor's
production capacity. Processors must prove they have paid at least the
minimum price to the producer. Products eligible for CDR are: cotton,
rice, corn, and wheat. Subsidized interest rates are 8.75 percent plus
banking expenses.

**5. Subsidy Auction Program (PEP):**

This program is similar to the U.S. loan deficiency payment program.
Through this program, the government pays the difference between the
prevailing market price and the minimum price of the product. Only
wheat, corn, and rubber have been eligible for this program so far. The
federal government through CONAB conducts public auctions to set a
premium for buyers of a given product. These buyers then contact
producers interested in selling their production at the minimum support
price in force. Buyers (normally processors or millers) must transport
the product to the destination previously established by the program.

**6. Option Contract:**

The federal government through CONAB offers a futures price, normally
between harvest periods, for purchase of eligible (wheat, corn, rice,
and cotton) product. The futures price is established by CONAB at the
moment the contract is offered, and the price is always above the
minimum price. The producer may acquire a put option to sell contracts
of 27 metric tons. The producer of the option contract acquires the
right to sell the contracted product to CONAB at a later date and price
specified in the contract.

**7. Product Equivalency:**

Small producers, under the Program to Strengthen Family Farms (PRONAF),
are entitled to production cost financing based on the equivalency
concept: farmers pay their back loans by delivering an equivalent amount
of the crops. The government established minimum price is used as
reference. This scheme is only available for cotton, rice, corn, and
wheat. Interest rates for small family farms are highly subsidized, at
the annual interest rate of 5.75 percent. The volume of credit available
at this rate is limited.

**8. Other:**

Long-term support for production and processing of agricultural products
is centralized in the BNDES - Brazilian Bank for Economic and Social
Development, along with the Special Agency for Industrial Financing
(FINAME). Both form the BNDES system. The BNDES system's mission is to
foster economic and social development in Brazil, acting as an agent for
long-term investments. The BNDES system provides financial support to
the following sectors of the Brazilian economy: agriculture, industry,
infrastructure, commerce and services. Please see page 16 for the total
amount of funds provided to long-term financing of agricultural
programs. The BNDES system offers a broad range of services to support
various agribusiness project types. Among those are:

> -- FINAME Rural. A credit line destined for acquisition, maintenance
> and/or rebuilding of agricultural machinery. The annual interest rate
> is 14.5 percent for a period of 5 years, with a grace period of two
> years.
>
> -- BNDES Automatic. A credit line aimed at creating pasture, other
> animal production projects, and for production of forest products.
> Annual interest rates are similar to the credit line above and terms
> of financing are flexible according to each project.

-   Other BNDES credit lines (mostly with subsidized interest rates) are
    specific for commodities, such as: PRODAMEL (Program for the
    Development of Apiculture); PROSOLO (Soil Conservation Program);
    PRODECAP (Program for the Development of Sheep and Goat); PROCAMOL
    (Program to Support the Development of Shrimp Farming); PRODEVINHO
    (Program for the Development of the Wine Industry); PROPASTO
    (Program for Pasture Improvement); PROLEITE (Program for Developing
    Milk Production); PROFRUTA (Program for the Development of the Fruit
    Industry);

## Brazilian Contracts on CBOT

On May 20, the Chicago Board of Trade (CBOT) will begin offering a
Brazilian soybean futures contract, which is expected to be identical to
the CBOT's current soybean futures contract. The Brazilian contract will
be traded in bushels, not metric tons; will have one-quarter cent price
fluctuations in dollars, not reals; will be settled through physical
delivery, not cash; and will be offered in the same months as the
US-based soy contracts - January, March, May, July, August, September
and November. The contracts' two delivery points for settlement will be
the major soybean ports of Santos and Paranagua.

The fast-moving soybean market has often led to wide differences between
futures prices and cash prices, which fluctuate wildly in Brazil,
causing basis swings of more than \$2 per bushel. With a Chicago-traded
Brazilian contract, however, processors and merchandisers are expected
to be better able to manage price risks in local and global markets.
Hedgers and market speculators will also be able to arbitrage to better
determine a fairer global soybean price. CBOT soybean traders will now
have two harvest contracts: November, viewed as the new crop contract
for US production, and March, which will likely be the new crop contract
for South American producers. The multinationals will likely continue to
participate in both contracts to even out risks and exploit prices
differences that might arise between the calendar-opposite North and
South American crops. CBOT is also planning to add Brazilian soybean
meal and soybean oil futures contracts, with similar specifications as
Chicago.[]{#__RefHeading___Toc102369014 .anchor}

**Stocks**

As prices began to drop in 2003/04, farmers increasingly began to hold
more quantities of soybeans, which caused stocks to rise. Storage
capacity is slowly increasing due to the investment being made by
multinationals. However, much product is still stored in the open
on-farm, which leads to some unnecessary loss and also creates
difficulty in tracking actual stock levels. Post forecasts high stock
levels at 4900 MT for 04/05, but is expecting a decrease in 05/06 due to
growing export and crush demand.

The Brazilian government does not hold oilseed stocks. The majority of
stocks are held by cooperatives, processors, or at the port. Domestic
processors and cooperatives carry soybeans as \"stocks\" until the
commodity is priced. The physical soybeans, however, may have already
gone to processing or export. Brazil's on-farm capacity is extremely
small, and can currently accommodate only about 5 percent of the local
crop. Although storage space is expanding at all levels, it is not
keeping up with production growth. Over the past several years grain
storage capacity has increased only 10 percent that of grain production.
The grain storage deficit is about 35 percent. Although storage is
increasing in the frontier, many farmers spend their profits buying more
new farmland instead of building on-farm storage. However, soybean
producers are now less inclined to quickly sell production that has not
already been contracted for and are increasingly electing to pay to
store new crop production to await better market prices.

# Policy

#### Import Tariffs

The Brazilian Government's import tariffs on oilseeds and products were
lowered 1.5 percent from last year and are contained in the MERCOSUL
Common External Tariff schedule (TEC). Brazil, Argentina, Paraguay and
Uruguay are members of the MERCOSUL trade pact. Bolivia and Chile are
associate members. The tariff rates are noted on the next page.

+---------------+---------------+---------------------+---------------+
| #             |               |                     |               |
| ###### MERCOS |               |                     |               |
| UL Common Ext |               |                     |               |
| ernal Tariffs |               |                     |               |
+---------------+---------------+---------------------+---------------+
| Tariff Code   |               | Description         | \%            |
+---------------+---------------+---------------------+---------------+
| 1201          |               | Soybeans            |               |
+---------------+---------------+---------------------+---------------+
|               | .00.10        | Seed for planting   | 0             |
+---------------+---------------+---------------------+---------------+
|               | .00.90        | Other               | 8             |
+---------------+---------------+---------------------+---------------+
| 1207          |               | Cotton              |               |
+---------------+---------------+---------------------+---------------+
|               | .20.10        | Seed for planting   | 0             |
+---------------+---------------+---------------------+---------------+
|               | .20.90        | Cottonseed          | 8             |
+---------------+---------------+---------------------+---------------+
| 1507          |               | Soybean oil, not    |               |
|               |               | chemically modified |               |
+---------------+---------------+---------------------+---------------+
|               | .10.00        | Crude               | 10            |
+---------------+---------------+---------------------+---------------+
|               | .90           | Other               |               |
+---------------+---------------+---------------------+---------------+
|               | .90.10        | Refined             | 12            |
+---------------+---------------+---------------------+---------------+
|               | .90.90        | Other               | 10            |
+---------------+---------------+---------------------+---------------+
| 1512          |               | Cottonseed oil      |               |
+---------------+---------------+---------------------+---------------+
|               | .21.00        | Crude               | 10            |
+---------------+---------------+---------------------+---------------+
|               | .29           | Other               |               |
+---------------+---------------+---------------------+---------------+
|               | .29.10        | Refined             | 10            |
+---------------+---------------+---------------------+---------------+
|               | .29.90        | Other               | 10            |
+---------------+---------------+---------------------+---------------+
| 1208          |               | Oilseed flour       |               |
+---------------+---------------+---------------------+---------------+
|               | .10.00        | Soybean             | 10            |
+---------------+---------------+---------------------+---------------+
|               | .90.00        | Other               | 10            |
+---------------+---------------+---------------------+---------------+
| 2304          |               | Meals resulted from |               |
|               |               | extraction of       |               |
|               |               | soybean oil         |               |
+---------------+---------------+---------------------+---------------+
|               | .00.10        | Meals & pellets     | 6             |
+---------------+---------------+---------------------+---------------+
|               | .00.90        | Other               | 6             |
+---------------+---------------+---------------------+---------------+
| 2306          |               | Meals resulted from |               |
|               |               | extraction of       |               |
|               |               | vegetable oil       |               |
+---------------+---------------+---------------------+---------------+
|               | .10.00        | Cotoonseed meal     | 6             |
+---------------+---------------+---------------------+---------------+
| Source:       |               |                     |               |
| Brazilian     |               |                     |               |
| Government -  |               |                     |               |
| Aduaneiras    |               |                     |               |
| Tarifa        |               |                     |               |
| Externa Comum |               |                     |               |
| (TEC)         |               |                     |               |
+---------------+---------------+---------------------+---------------+

#### Interstate Movement Tax (ICMS) Exemption (Lei Kandir)

In September 1996, through "Lei Complementar 95-A", better known as the
"Lei Kandir," the GOB exempted exports of raw materials and
semi-manufactured products from the interstate movement tax (ICMS -
Imposto Sobre Circulação de Mercadorias e Serviços). In other words, it
canceled this export tax on soybeans and derivative products. Prior to
the change, interstate movement of soybeans going to export were taxed
at 13 percent, while soybean meal and soybean oil were assessed lower
rates: 11 and 8.5 percent respectively. While state governments are in
desperate need of tax revenue sources and the domestic crushing sector
continues to chafe under the exemption, elimination of the Lei Kandir
does not appear likely in the foreseeable future. However tempting it
may be for the Brazilian Government to consider an export tax because of
the need for revenues in a taxation system that is in dire need of an
overhaul, the prevailing sense is that such a tax will not be
re-adopted.

#### Biodiesel

As the world's leader in alcohol/ethanol (made from sugar in Brazil)
production and consumption, Brazil is now eyeing biodiesel. 0n October
30, 2002, Brazil launched the Probiodiesel program, with Portaria MCT
Number 702, Directive #702 of the Ministry of Science and Technology
(MCT). The program aims to develop technology for the production,
industrialization, and use of biodiesel, and its use in mixtures with
diesel using pure and residual vegetable oils. Brazil wants to reduce
its dependence on diesel imports, as it has successfully done with
petroleum. Although Brazilian consumption of petroleum has been
increasing, imports have declined due to growing domestic production and
the use of ethanol. While most vehicles in Brazil no longer operate on
100 percent alcohol fuel, all Brazilian gasoline requires 25 percent
alcohol content, which considerably reduces petroleum requirements.
However, the situation with biodiesel is quite different. Consumption
and imports have been rising rapidly with demand, and the Brazilian
government is concerned with the growing dependence on diesel imports.

Brazil's soil and climate diversity presents various crop possibilities
for biodiesel, such as soybean, palm, coconut, castor seed, cottonseed,
sunflower, etc. As soybeans account for the vast majority of Brazilian
oilseed production, it presents the most viable option for large scale
production. Furthermore, the processing sector is well developed and
Brazilian soybean research is advanced and more easily mobilized.
However, other commodities are better options for Brazil's remote North
and Northeast interior. Small-scale self-sufficiency is the aspiration
for these regions, which are remote and difficult to reach with imported
fuels. The semi-arid Northeast is focusing on castor seed, while the
Amazon region would likely adopt palm oil. However, the remoteness and
isolation of these areas makes it highly unlikely that they could become
significant producers or exporters.

Variability of agricultural commodity prices has been more dramatic than
that of oil, thereby reducing its attractiveness as an economic
alternative. However, many believe that it is only a matter of time
before biodiesel becomes permanently profitable, as natural diesel
sources dry up. Northeastern Brazil is encouraging the production of
castor seed by small-scale producers for biodiesel production. Other
commodities are being explored in different regions, such as soy,
sunflower, biodiesel, and used cooking oils.

## 

## Biotechnology

Brazil's House of Representatives and the President approved a new
Biosafety Bill in March, which replaced one adopted in 1995. The new
Biosafety Bill passed the House by a 366-59 vote and combines two
different controversial issues in Brazil: embryonic stem cell research
for treatment purposes and production and marketing of biotech crops.
This Congressional approval also included changes approved previously by
the Senate that were considered "biotech friendly."

The Biosafety Bill grants full power to the National Technical
Commission on Biosafety (CTNBio) to authorize the planting of biotech
soybeans and other crops and the authority to waive environmental
studies to approve such products. The lack of full authority to CTNBio
was used as the grounds for a successful lawsuit filed by the Brazilian
Consumer Group (IDEC) 6 years ago, in which the final ruling prohibited
the planting of biotech soybeans. It is not clear yet if the new Draft
Bill once signed and published by the President's office will end the
current court cases against RR soybeans.

Due to the passing of this legislation, Post expects that the majority
of Brazilian soybean farmers would go biotech as early as next crop
year. However, impediments exist that may keep biotech soybeans from
expanding very rapidly. Growth in the next couple of years is expected
to be somewhat gradual based on the following:

1\) Lack of biotech seed on hand. ABRASEM, the Brazilian Association of
Seed Producers, estimates that there are 4.5 million bags of biotech
seed for next year, enough to cover 30% of the current planted area in
Brazil. The 2004/05-planted area is estimated at 15-20% biotech.
Monsanto also reported that they do not have seed ready to supply next
year\'s crop. The main producers of RR soybean seed in Brazil are
Embrapa, with 20%, followed by Pioneer, Fundacep (Central Experiment and
Research Foundation), and the Mato Grosso Foundation.

2\) Seed not yet developed for conditions outside the South. Seed
brought in from Argentina across the southern border areas has worked
well in the southern region. There are 38 varieties approved for use,
including 19 developed by Monsanto, 10 by Embrapa, and 9 by other
companies. But, according to ABRASEM and contacts at Embrapa,
appropriate varieties for the warmer and more humid regions have begun
to be researched more recently, and will not be ready for next year's
crop. There are two projects currently targeting biotech seeds that are
appropriate for the center-west and Amazon climates. One is a joint
Monsanto/Embrapa project that takes conventional varieties already
adapted for the region and adds the Glyphosate resistant gene. The
expected launch of these biotech seeds is at least one year away. The
other project, creating new transgenic seeds for the warmer climates
outside of Southern Brazil, has just begun to be researched by Embrapa
and BASF.

3\) For the first year of legal GMO seed production for commercial use,
dry weather is also creating a seed supply that leaves much to be
desired. After negotiating with the government for seven years for the
freedom to produce GMO seed, the sector now confronts dry weather that
has cut its seed production 30%. According to the Brazilian seed
association, an initial forecast of 5 million bags for next year's
harvest has been cut to 3.5 million. This supply will plant 5 million
hectares, which is approximately the same amount of area occupied with
illegal GM soy this year.

On the other hand, there are several points that support biotech soybean
expansion in Brazil. The main motivator for growing biotech soybeans is
lower production costs. DERAL has reported that biotech soybeans cut 20%
of the costs of producing conventional varieties (see chart below), and
this savings has been verified by other sources. Farmers in the south
have been growing roundup ready seed for several years, both with and
without paying royalties. They obviously continue to do it because it is
cost-effective. In the case of Argentina, planting soybeans with RR seed
began in 97/98, and within 5 years they were almost entirely biotech. A
study performed by Nidera showed that Argentine farmers economized \$1
billion per year with biotech seed.

+-------------+-------------+-------------+-------------+-------------+
| Cost        |             |             |             |             |
| Comparison: |             |             |             |             |
| C           |             |             |             |             |
| onventional |             |             |             |             |
| Vs. Biotech |             |             |             |             |
| Soybeans    |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Item        | C           | Biotech     | Cost        | Variation   |
|             | onventional |             | Variance    |             |
|             |             | \$/ha       |             |             |
|             | \$/ha       |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| ##          | 42.00       | 40.50       | 2.00        | 5%          |
| #### Machin |             |             |             |             |
| e Operation |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| ######      | 2.00        | 2.00        | \-          |             |
| Maintenance |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Seasonal    | 1.00        | 1.00        | \-          |             |
| Labor       |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Seed        | 35.00       | 50.00       | (15.00)     | -42%        |
+-------------+-------------+-------------+-------------+-------------+
| Fertilizer  | 77.50       | 77.50       | \-          |             |
+-------------+-------------+-------------+-------------+-------------+
| Herbicide   | 94.00       | 17.00       | 77.00       | 82%         |
+-------------+-------------+-------------+-------------+-------------+
| Insecticide | 15.00       | 15.00       |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Fungicide   | 53.00       | 53.00       |             |             |
+-------------+-------------+-------------+-------------+-------------+
| General     | 6.00        | 5.00        | 1.00        | 20%         |
| Expenses    |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Transport   | 14.00       | 14.00       | \-          |             |
+-------------+-------------+-------------+-------------+-------------+
| Drying and  | 8.50        | 8.50        | \-          |             |
| Storage     |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Technical   | 6.50        | 5.00        | 1.50        | 20%         |
| Assistance  |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Crop        | 9.60        | 8.00        | 1.60        | 20%         |
| Insurance   |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Interest    | 17.00       | 14.00       | 3.00        | 19%         |
+-------------+-------------+-------------+-------------+-------------+
| Total       | 383.00      | 310.00      | 73.00       | 19%         |
| Variable    |             |             |             |             |
| Costs (A)   |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| ######      | 18.50       | 18.00       | .50         | 4%          |
| Machinery D |             |             |             |             |
| epreciation |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Facility    | 5.00        | 5.00        | \-          |             |
| D           |             |             |             |             |
| epreciation |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Soil        | 8.50        | 8.50        | \-          |             |
| Correction  |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| #####       | 3.00        | 2.75        | .25         | 3%          |
| # Insurance |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Fixed Labor | 34.50       | 34.50       | \-          |             |
+-------------+-------------+-------------+-------------+-------------+
| Sub-Total   | 69.50       | 68.50       | 1.00        | 1%          |
| (B)         |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| ##          | 25.00       | 24.50       | .50         | 2.5%        |
| #### Return |             |             |             |             |
|  on Capital |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Return on   | 66.50       | 66.50       | \-          |             |
| Land        |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Sub-Total   | 91.50       | 91.00       | .50         | 1%          |
| (C)         |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Total Fixed | 161.00      | 160.00      | 1.00        | 1%          |
| Costs (B+C) |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| Operational | 452.00      | 379.00      | 73.00       | 16%         |
| Costs (A+B) |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| **Total     | **544.00**  | **470.00**  | **74.00**   | **14%**     |
| Costs       |             |             |             |             |
| (A+B+C)**   |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+

Source: Deral

Biotech soybeans this year will make up 20 percent of the total soybean
harvest, according to CONAB. They are expecting 12 million metric tons
of biotech soybeans, which is a 9.8 percent increase over last year's
GMO crop. The largest growth of GM soybeans will take place in the
center-west and Bahia, where a local consultant expects area to grow to
60% of total production in two years.

# 

After 5 months of intense negotiations, Monsanto reached a 2-year
agreement with entities that represent farmers on the point of delivery
system the company had developed. Under this system, Monsanto collects
post-harvest fees for those soybeans that have been planted from seed
for which royalties have not been paid.

For this season, the price will be 1% for declared and 3% for
non-declared RR soy. For the 2005/2006 crop season the price will be 2%
declared and 3% non-declared. At current soy prices (near historical
average) it means \$2.10 per ton this season and \$4.20 per ton next
season declared and \$6.30 per ton non-declared. The compensation fee
for the non-authorized use of Roundup Ready technology is a legal right
supported by the Brazilian Federal Constitution, Brazilian Patent Law
and the international Agreement TRIPS.

Especially now, with the new Biosafety Law, which provides a clear
regulatory framework for the research and commercialization of new
biotechnology crops in the country, Brazil has shown willingness to
embrace and protect new technologies for the benefit of agriculture.

# Marketing

## 

## Increase in Multinational Participation

Multinationals are expected to move at least 55% of this year's harvest.
The four largest companies operating in Brazil- Bunge, Cargill, ADM, and
Coinbra, now account for \$5.7 billion or 6% of total exports, up from
3.9% in 1999. Multinationals have also increased their share in
agricultural input sales. However, Brazilian companies have grown more
percentage-wise in the soybean business than the multinationals.
Bianchini, Amaggi, Selecta, Caramuru, and Coamo have grown between 300
and 500% since 1999, and together move nearly \$2 billion a year in
soybeans alone.

Co-ops' share of the pie is also increasing, albeit on a much smaller
scale. The Organization of Brazilian Cooperatives reports that they
export 8.5% of soybeans in Brazil. Some have been able to achieve direct
marketing circuits with European and Asian buyers, but this is still
fairly rare for a Brazilian co-op, and credit is the biggest obstacle.
Producers in the expansion areas are particularly dependent on
multinational grain companies, while the tradition of co-ops in the
South is stronger and more established. In the state of Paraná, 65% of
the soybean crop goes to co-ops.

# Infrastructure

ADM is planning a new port in Nueva Pamira, Uruguay, scheduled for
launch in 2007. The port will have a annual shipping capacity of 1-2 MMT
of soybeans, and investment is estimated at US\$25 million. The port is
convenient for shipping soybean production from Bolivia, Paraguay and
some Brazilian production that has been moving through the ports of
Santos and Paranagua.

**Brazilian Soybean Transportation System Map**

![](media/image2.jpeg){width="5.708333333333333in"
height="5.475694444444445in"}

Source: FNP Online (www.fnp.com.br)

Part of the reasoning behind the new port is the cheaper shipping costs
in Argentina and Uruguay, which are \$3.00-3.50 per metric ton while
Brazilian ports cost \$7.00-8.50 per metric ton. Manual labor,
bureaucracy and port tariffs contribute to the large difference in cost.
There are also logistical problems in Brazil since many channels are not
well dredged, forcing vessels to come out partially loaded. In addition,
the Santos port improvements were ceased in 2002 due to environmental
objections and the ban of GMO soybeans in the port of Paranagua has
caused several problems as that production area shifts to Roundup Ready
soybeans.

Blairo Maggi, the governor of the state of Mato Grosso and Brazil\'s
largest soybean farmer, recently announced the long-awaited paving of
the road BR 163 from Cuiabá to Santarem may be completed in 2008. The
road is approximately 1000 kilometers long and goes from the major
soybean growing areas in Mato Grosso to the Amazonian port city of
Santarem in the state of Pará. Farmers have pushed for paving this road
for years since it would reduce the distance they would have to
transport their soybeans by about 900 kilometers and save them about
\$15 per metric ton in transport costs. Cargill already has a loading
facility in Santarem, but the road there is treacherous in the rainy
season because it is not paved.

The state government in Mato Grosso hopes to have the \$350-\$400
million cost of paving the road financed by government funds with
repayments guaranteed by tolls collected by a consortium consisting of
Grupo Maggi and other multinational grain trading firms. It is expected
that an average of 2000 trucks loaded with soybeans, fertilizers and
other materials will be using the road each day when completed. The
proposed plan is to involve farmers in the region, who will use their
tractors and trucks to help out in building the road in the hopes that
the road can be operated toll-free.

+---------------+---------------+-----------+-----------+-------------+
| ####### Exam  |               |           |           |             |
| ples of Freig |               |           |           |             |
| ht Rates for  |               |           |           |             |
| Bulk Soybeans |               |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| **Truck       |               |           |           |             |
| (production   |               |           |           |             |
| area to       |               |           |           |             |
| port)**       |               |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| **Origin**    | **            | *         | **U       | **US\$/ton  |
|               | Destination** | *Distance | S\$/ton** | per km**    |
|               |               | (km)**    |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Alto Garças,  | Paranaguá,    | 1498.89   | 49.82     | 0.0332      |
| MT            | PR\*          |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Amambaí, MS   | Paranaguá,    | 964.02    | 38.63     | 0.0401      |
|               | PR\*          |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Campo Novo do | Porto Velho,  | 1880.41   | 33.72     | 0.0179      |
| Parecis, MT   | RO\*          |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Canarana, MT  | Paranaguá,    | 1923.96   | 58.18     | 0.0302      |
|               | PR\*          |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Jataí, GO     | Santos, SP\*  | 1045.94   | 39.56     | 0.0378      |
+---------------+---------------+-----------+-----------+-------------+
| Medianeira,   | Paranaguá,    | 632.18    | 20.33     | 0.0322      |
| PR            | PR\*          |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Mineiros, GO  | Paranaguá,    | 1353.01   | 40.67     | 0.0301      |
|               | PR\*          |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Mineiros, GO  | Santos, SP\*  | 1148.33   | 44.36     | 0.0386      |
+---------------+---------------+-----------+-----------+-------------+
| Rio Verde, GO | Santos, SP\*  | 958.61    | 16.27     | 0.0170      |
+---------------+---------------+-----------+-----------+-------------+
| **Rail (rail  |               |           |           |             |
| head to       |               |           |           |             |
| port)**       |               |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| **Origin**    | **            | *         | **U       | **          |
|               | Destination** | *Distance | S\$/ton** | US\$/t.km** |
|               |               | (km)**    |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Alto Taquarí, | Santos, SP\*  | 1295.77   | 34.01     | 0.0262      |
| MT            |               |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Pederneiras,  | Santos, SP\*  | 489.80    | 13.31     | 0.0272      |
| SP            |               |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Porto Franco, | São Luis,     | 712.85    | 13.94     | 0.0196      |
| MA            | MA\*          |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| **Water       |               |           |           |             |
| (river port   |               |           |           |             |
| to river      |               |           |           |             |
| port)**       |               |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| **Origin**    | **            | *         | **U       | **          |
|               | Destination** | *Distance | S\$/ton** | US\$/t.km** |
|               |               | (km)**    |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Ibotirama, BA | Petrolina, PE | 612.69    | 10.35     | 0.0169      |
+---------------+---------------+-----------+-----------+-------------+
| Porto Velho,  | Itacoatiara,  | 1116.36   | 15.89     | 0.0142      |
| RO            | AM\*          |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| São Simão, GO | Anhembi, SP   | 749.35    | 10.72     | 0.0143      |
+---------------+---------------+-----------+-----------+-------------+
| São Simão, GO | Pederneiras,  | 634.72    | 9.06      | 0.0143      |
|               | SP            |           |           |             |
+---------------+---------------+-----------+-----------+-------------+
| Source:       |               |           |           |             |
| Freight       |               |           |           |             |
| Information   |               |           |           |             |
| System -      |               |           |           |             |
| Sifreca       |               |           |           |             |
| (http://sif   |               |           |           |             |
| reca.esalq.us |               |           |           |             |
| p.br/sifreca) |               |           |           |             |
|               |               |           |           |             |
| \"\*\"=       |               |           |           |             |
| export point; |               |           |           |             |
| Average       |               |           |           |             |
| exchange rate |               |           |           |             |
| for           |               |           |           |             |
| M             |               |           |           |             |
| arch/05:2.705 |               |           |           |             |
+---------------+---------------+-----------+-----------+-------------+

This road has been fiercely opposed by environmental groups who oppose
paving the road because they fear it will lead to the wide spread
development and deforestation of the Amazon Basin.

Producers in the south experienced higher than usual trucking costs as
producers, cooperatives, traders, and industry compete for available
truck transportation at harvest. Increases of 50% over the normal rate
with payment due in 15 days have been reported. Prices for
transportation in Paraná from Cascavel to the Paranaguá port went from
\$17 to \$30 dollars, which makes transporting soybeans from the
interior of the country to the port with current prices no longer
viable. Although not the only factor, transportation difficulties seem
to play a role in the holdup in farmers' selling this year. Even as
prices have picked up during the season, a response to higher market
prices from the farmers hasn't occurred.

**Total Meals**

# Production

Brazilian meal production consists mainly of soybean meal, which makes
up 98% of Brazil's total meal. Roughly two percent consists of
cottonseed meal. Soy meal production for 2004/05 is projected at 24 MMT,
up from last year's production of 22.9 MMT. Production for 2005/06 is
expected to reach 26.2 MMT, due to the increasing domestic and global
demand that is related to increasing meat production. Cottonseed meal is
expected to reach 900,000 tons in 2004/05 and 950,000 tons in 2005/06 as
cotton production expands.

# Consumption

As the domestic poultry and hog sectors expand at a fast pace, the
demand for meal has rapidly increased as well. Sixty-five percent of
domestic soy meal goes to the poultry sector, while 25 percent goes to
pork production. The cottonseed meal is consumed by the cattle industry.
Soy meal demand is estimated at 9.1 MMT for 2004/05, and animal sector
expansion should cause meal consumption to increase to 10 MMT in
2005/06.

# Trade

Nearly all Brazilian meal exports are soybean meal, which are expected
to increase 1.5 MMT to 16 MMT in 2006. Strong demand for vegetable meals
with high protein levels continues in the world market and this growth
is expected to continue in the upcoming year. Token imports from
Paraguay and Argentina occur from time to time, and may happen this year
if shortages occur during periods when farmers, due to low international
prices, do not sell their beans. Brazilian meal exports have been
affected by the relatively high value of the Real relative to the U.S.
dollar

# Stocks

The government of Brazil does not hold meal stocks and the only stocks
in Brazil are in the hands of feed millers and crushers.

# Marketing

Brazilian soybean meal is known for its high levels of protein. However,
the non-biotech label that was used by Brazilian exporters in the past
to differentiate their product from that of other international
suppliers will no longer be relevant. Since Brazil can no longer claim
to be a non-GMO supplier, this may affect its competitiveness in the EU.

**Total Oils**

### Production

Soybean oil dominates Brazilian oil production. Meal demand is the most
important crush driver, and oil prices have served to maximize output to
the extent possible. Brazilian soy oil production is forecast at 5.65
million tons in 2004/05 and 5.72 million tons in 2005/06. Cottonseed oil
production is expected to reach 310,000 tons in 2004/05 and 330,000 tons
in 2005/06. Brazil also produces small quantities of coconut, rice,
corn, peanut, palm, canola, castor, and sunflower seed oils.

### Consumption

Consumption of soybean oil is forecast at 3 million tons in MY 2004,
while cottonseed oil consumption is forecast for 270,000 tons. The
forecast for MY 2005 is for increased consumption of both oils. Soybean
oil remains the principal home cooking oil in Brazil. Cottonseed oil
goes largely to industrial uses, such as margarine. Other edible oils,
such as corn, sunflower seed, canola and olive are readily available and
also widely used across Brazil.

### 

### Trade

Soy oil exports for 2004/05 are projected at 2.5 MMT, down from 2.6 MMT
last year. Out year exports are forecast to increase slightly due to an
expectation of increased production and crush.

As is the case for meal and oilseeds, imports of vegetable oil are
expected to stay small and will continue to originate predominantly from
neighboring countries.