April 1, 2015
Soybean Harvest in Mato Grosso Nearing Completion
The soybean harvest in Mato Grosso is nearly complete with 94% of the crop harvested according to the Mato Grosso Institute of Agricultural Economics (Imea). The western part of the state is the most advanced with 98% harvested and the northeastern region is the slowest with 77% harvested. Mato Grosso is the largest soybean producing state in Brazil responsible for approximately 30% of Brazil's production.
Farmers in the state have been relatively aggressive in selling this year's soybean crop in order to take advantage of the weaker Brazilian currency. Farmers have sold over 60% of this year's crop and even 2% of their anticipated 2015/16 soybean crop. They would also like to purchase their inputs for the next crop before prices increase, but input purchasing has been slow due to a reluctance of the Bank of Brazil to offer new production loans until the new Harvest Plan is released in May. The interest rate on the 2014/15 production loans was 6.5%, but the rate is expected to increase to 8.5% on the 2015/16 production loans.
The cost of producing the 2015/16 soybean crop in Brazil is going to be the highest on record primarily due to the weaker currency which makes imported fertilizers more expensive (70% of Brazil's fertilizers are imported) and more expensive credit. With increased costs and uncertain commodity prices going forward, profit margins on soybean production in Mato Grosso for the 2015/16 growing season look uncertain.