Agricultural production and yield estimation

Brazil has been increasing its importance in agricultural markets. The reasons are well known tobe the relative abundance of land, the increasing technology used in crops, and the developmentof the agribusiness sector which allow for a fast response to price stimuli. The elasticity ofacreage response to increases in expected return is estimated for Soybeans in a dynamic (longterm) error correction model. Regarding yield patterns, a large variation in the yearly rates ofgrowth in yield is observed, climate being probably the main source of this variation which resultin ‘good’ and ‘bad’ years. In South America, special attention should be given to the El Nino andLa Nina phenomena, both said to have important effects on rainfalls patterns and consequentlyin yield. The influence on El Nino and La Nina in historical data is examined and some ways ofestimating the impact of climate on yield of Soybean and Corn markets are proposed. Possibleimplications of climate change may apply.