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April 9, 2015

Farmers Disappointed with Soy Hoping for Better Safrinha Corn

The irregular rainfall this past growing season in central Brazil probably impacted the soybean production in the state of Goias more than in any other location in Brazil. In the municipality of Santa Helena do Goias, which is located in southern Goias, soybean yields were severely impacted by dry weather that hit in January.

Unfortunately, the soybeans were just beginning the pod filling process when the rains turned off resulting in highly variable soybean yields, sometimes within the same field. Some of the hardest hit areas ended up with yields as low as 6 to 7 sacks per hectare (5 to 6 bu/ac) while others yielded 20 to 25 sacks per hectare (17 to 21 bu/ac). There are reports that some of the farmers who forward contracted their soybeans may not have enough production to cover their contracts. Soybeans were being forward contracted earlier in the growing season for R$ 52 to R$ 53 per sack of 60 kilograms, but prices have now improved to R$ 58 to R$ 62 per sack thanks to a weaker Brazilian currency.

Even though the soybean harvest was delayed, most farmers in the municipality had already purchased their seed and inputs for the safrinha corn crop, so they went ahead and planted their corn hoping for the best. The corn is still in vegetative development, but the weather thus far has been good for the corn crop.

Domestic corn prices in Brazil have improved with the weakening of the Brazilian currency and some farmers have forward contracted their corn production for R$ 20 per sack, which is enough to cover their production costs.

Farmers are now concerned that the federal government will not make any low interest loans available to purchase inputs for the 2015/16 crop until the new Harvest Plan takes effect on July 1st. The interest rates on the loans under the 2014/15 Harvest Plan was 6.5%, but the rate is expected to increase to 8.5% under the 2015/16 Harvest Plan.