3 MIN. DE LECTURA
(Adds 2015/16 soy estimate, byline, quotes from Brazil's soy producers' association)
By Gustavo Bonato
SAO PAULO, Aug 3 (Reuters) - Archer Daniels Midland Co expects average profit margins in Brazil's 2015/16 soy production to fall 77 percent from the previous season after two years of falling soybean prices, the company's South America president said on Monday.
Valmor Schaffer projected profit margins of 122.20 reais ($35.42) per hectare, down from 539.03 reais in 2014/15, and said average margins would only remain positive because of a weakening Brazilian currency.
"This harvest (2015/16), we still have (positive) margins... but not everyone sold soy with the dollar at 3.4 reais," Schaffer said at a conference sponsored by Brazil's Agrobusiness Association (Abag) in Sao Paulo.
Brazil's currency is 35 percent weaker than it was a year ago and is trading around its lowest in 12 years just as farmers are making final decisions for planting the upcoming 2015/16 crop that will be planted starting in September.
A weaker local currency means farmers bring home more reais for each dollar earned for exporting a bag of soybeans, even as the price of the underlying commodity weakens in dollars.
But it also means they can pay more for dollar-denominated imports like fertilizers and insecticides, which become more expensive in local currency terms.
It particularly hurts farmers who rely on a bartering system in which they buy fertilizers and other inputs in exchange for promising to deliver a portion of the upcoming crop.
"The terms of bartering soy for inputs has deteriorated for the producer," according to a local farming consultant Clarivi said in a report released on Monday, adding that fertilizer prices have risen 40 percent.
The consultant said the terms of trade for a tonne of fertilizer rose to 22.2 60-kg bags of soybeans in 2015/16, from 19.8 bags last crop and 18.56 bags the crop before.
Despite falling profit margins, farmers are still expected to increase the area planted with soybeans when they plant the 2015/16 crop starting in September, though less than in recent years. Soybean prices are still more competitive than corn.
Local consultancy Celeres estimated on Monday that area would increase 2.3 percent to a record 32.2 million hectares, for a potential record crop of 97 million tonnes, citing a favorable exchange rate and lack of more lucrative planting options.
"This is not the time to expand into new area," said Almir Dalpasquale, president of Brazil's soy producers' association Aprosoja. "Expanding area is only for those with ample personal resources."
$1 = 3.45 reais Reporting by Gustavo Bonato; Writing by Caroline Stauffer and Reese Ewing; Editing by Bernadette Baum and Diane Craft