Traders Group Response to Time Magazine

To the editor:

Time Magazine validated claims that they are deforesting the Amazon because of biofuels. That's a lie. Blaming biofuel for deforesting the Amazon puts ethanol in the same position as a black guy in a white neighborhood in the 1950's when the liquor store got robbed. Authorities had their criminal and didn't have to prove it.       

First of all, loggers clear the Amazon rain forest. They do it because of demand for hardwoods. They have to do something with it after the land is cleared and they typically turn it into pasture for cattle. Very few soybeans are grown in rain forest areas. If they want to grow soybeans in Brazil, it's a lot easier to clear Cerrado, which is shrub covered savannah because all those trees are not in the way. If the objective is lumber, then the Amazon is full of trees. If the objective is to grow soybeans in Brazil, that can be done with no ecological damage to Brazil's rain forest but that doesn't make as good a story.    

The idea of clearing rain forest is an environmental attention grabber. Where as, planting more soybeans in the Mato Grosso just isn't as ecologically threatening, therefore not as sexy. It just won't turn heads as sharply or attitudes against biofuel as effectively as "destroying rain forest." If biofuel was actually driving the deforestation of the Amazon, the rate of deforestation should have been climbing, yet since 2004, it's fallen sharply with square miles being cleared annually, declining by over half since 2004.    

"In August 2007, Brazil's President Luiz Inacio da Silva gave an address, announcing that the pace of deforestation in the Brazilian Amazon fell by 25% in the recent 12 month period (July 2006-July 2007)."                

There was zero perspective given to the trend of Amazon deforestation in the Time article. If Amazon deforestation was tied to biofuel, then the trend of deforestation should be climbing sharply and it's not. There is global buyer resistance to purchasing soybeans grown in the Amazon region and the Brazilian government has been enforcing more restrictions.  

As I said, if you were going to Brazil to grow soybeans, you wouldn't farm the Amazon with so much better land easier to develop in the Cerrado region. This land was called a desert until it was discovered just a few decades ago that a soil adjusting application of lime would produce good soybeans. Soybean production makes good use of "desert." I expect Brazilian soybean acreage to climb as the U.S. grows more corn and Brazil fills the void left in the global market from reduced U.S. soybean production. I also expect the rate of Amazon deforestation to continue to decline as the two just are not linked as the Time article contends.

Brazil's biofuel production is sugar cane based. Brazil's climate is not ideal for corn and yields are relatively poor so that Brazil is not a major corn grower. Its climate is more suitable for soybeans and sugar cane. Time has no problem with Brazil's sugar cane based biofuel economy. They don't grow sugar cane in the Amazon. They don't grow hardly any soybeans there either. Without the imaginary link between soybeans and Amazon Rain Forest, they should not have any problem with Brazil's soybean production either. The reason U.S. soybean prices went up was not so much biodiesel but reduced soybean acreage to grow corn and strong export demand from China which is also not biofuel related. Without connecting biofuel to the destruction of the Amazon rain forest, Time Magazine didn't have a story, which means they didn't have a story so they changed the facts so they did.   

Brazil will not only be a major bio-energy exporter, but can make sure the world is well fed while lowering its energy cost. That's a pretty terrific place to be.   

Christopher D. Manns

President/Global Commodities & Research Analyst

C.D. Manns at Traders 8 - productions network