Last year wasn't a great time to be a Brazilian farmer. Soybean
and corn producers across the country were hit with droughts at
planting and near floods at harvest, and earlier and stronger
onsets of Asian rust in between. The biggest problem was a
worsening of an already unfavorable exchange rate — creating
extremely low market prices. The picture isn't pretty. Although
the government initially expected an output of 60 million metric
tons (mmt) for the 2005-06 soybean harvest, the Brazilian
Association of Vegetable Oil Industries (locally Abiove), now
pegs the crop at 52.6 mmt, 12% below the government's initial
estimate. The Brazilian grain sector has accumulated losses of
more than $10 billion in the past two harvests, 68% of which
came at the expense of the soybean industry. Diesel fuel is up
200% since 2004, and the devaluation of the U.S. dollar in
relation to the real is down 25% since 2004. Most producers in
Brazil depend on export markets, so a weak dollar means fewer
reals for their beans. A recent