April 17, 2017
Reduced Truck Traffic Sign of Slow Soybean Selling in Brazil
Farmers in Mato Grosso produced a record large soybean crop in 2016/17, but another sign that they have been reluctant to sell their soybeans is the reduced number of trucks hauling soybeans in highway BR-163. Highway BR-163 is the main artery for moving soybeans out of Mato Grosso to export facilities in southern Brazil and also along the Amazon River. The number of trucks traveling the highway this year is significantly lower than last year.
BR-163 is now a toll road for most of its length through the state, so it is easy to track the number of trucks that go through the toll plazas. The highway authority in Mato Grosso reported that from January through March of this year, 3.0 million trucks passed through the toll plazas on BR-163 compared to 3.6 million during the same period in 2016 or a reduction of 14%. The reduction is noteworthy because there should be more trucks than last year due to the record large soybean crop produced in 2016/17.
The reduced truck traffic may not reflect only slow soybean sales, but it could also be due in part to reduced corn shipments. In early 2016, farmers in the state were still shipping out some of their 2014/15 safrinha corn production, whereas in early 2017, all of the 2015/16 safrinha corn had been shipped. The 2015/16 safrinha corn crop in Mato Grosso was severely impacted by hot and dry weather, which reduced the production and resulted in near record high corn prices in late 2016. The lower production and high corn prices encouraged farmers to sell their corn quickly. As a result, there were very few trucks hauling corn out of the state during the first three months of this year.
The Mato Grosso Institute of Agricultural Economics (Imea) reported that by the end of March, farmers in the state had harvested 95% of the soybeans and that 65% of the crop had been sold. Farmers have been slow sellers of their soybeans because soybean prices in Brazil have declined for four straight months, so there is little wonder why farmers are holding onto their soybeans. The percentage of soybeans sold during the month of March was less than the five-year average for the month.
The selling price during March in Mato Grosso averaged R$ 53.86 per sack (approximately $7.89 per bushel), which is the lowest thus far during the 2016/17 growing season. The average price for the entire growing season thus far is R$ 65.87 per sack (approximately $9.65 per bushel). The average selling price is higher than last year, but that is only due to the much higher prices farmers received many months ago when they started to forward contract their soybeans.
Farmers in Brazil are expected to continue to be slow sellers of their soybeans while they wait for improved prices. Probably the best opportunity for improved prices would be the result of adverse weather in the United States during the spring or early summer.