April 25, 2012
Soybean Prices Reach Record Levels in Mato Grosso
Prices paid for soybeans in Brazil continue to increase on nearly a daily basis. They had previously reached record levels in the state of Parana and they have now set new records in the state of Mato Grosso as well. During the first 20 days of April, the average price of soybeans in the state was R$ 48.30 per sack which is 32% higher than the average price during the same period last year when it reached R$ 36.60 per sack.
Last Friday, soybeans in Primavera do Leste, which is located in southeastern Mato Grosso, were selling for an all-time high of R$ 55 per sack. The prior record was set in July of 2008 when the price reached R$ 48.90 per sack. At that time the Brazilian currency was trading at 1.61 to the dollar and now it is trading at 1.88 to the dollar. The weakened Brazilian currency is helping to sustain the high soybean prices in Brazil.
Price increases at this time of the year just after the soybean harvest is complete are not very common because of the large amounts of soybeans being sold by farmers as they complete the harvest. The price increases this year are being driven by smaller crops in South America, strong worldwide demand, and more emphasis on additional corn acreage in the U.S. at the expense of soybean acreage.
Farmers in Brazil are quickly selling their old crop soybeans and forward contracting their anticipated 2012/13 production. If South American crop estimates continue to decline or if there is a weather scare in the U.S. over the next few months, Brazilian farmers could expect even higher highs for soybeans.