Environmentalists called Minc's initiative essential to the protection of the world's largest rainforest. Deforestation in the region quickened in the past months as world grain prices continue to set record highs.

The moratorium is a commitment by the local Vegetable Oils Industry Association (Abiove), which includes big crushers such as Cargill Inc, Bunge Ltd, ADM Co and Louis Dreyfus, and the Grain Exporters Association (Anec) to extend the expiring, one-year ban that began in July 2006.

Rising prices are reviving the local soy sector out of its worst crisis in decades. In 2004 through 2006, the rise in the real against the dollar and production costs like fuel and fertilizers pushed many producers to the brink of insolvency.

Brazil is the world's second largest soy producer after the United States. Abiove and Anec control about 94 percent of Brazil's soy trade.

"The decision today is very important as it shows a leading sector in Brazilian agribusiness can guarantee food production without the need to cut down one more hectare of Amazon," Paulo Adario, Greenpeace Amazon campaign director, said in a note.

Deforestation of the Amazon is on course to rise after three years of declines, with figures for April released earlier this month showing a startling 434 square miles (1,123 sq km) of trees lost in the month.

Minc replaced Amazon defender Marina Silva as environment minister last month, raising concern among environmentalists that the government is siding with farming and industrial interests that want to develop the forest.

In a show of commitment to Amazon protection, the government unveiled initiatives in past weeks including the creation of three protected reserves and an operation to impound cattle grazing on illegally cleared pastures.

But Greenpeace said a one year extension may not be long enough to build the tools necessary to ensure that soy production does not result in further deforestation.

(Additional Reporting by Inae Riveras in Sao Paulo; Editing by Reese Ewing and Bill Trott)