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August 12, 2011

Brazil Soy Producers have Already Sold 20% of 2011/12 Production

With planting of the 2011/12 Brazilian soybean crop set to begin later in September, producers in Brazil have taken advantage of strong soybean prices to forward sell their soybean crop. Estimates are that 20% of the 2011/12 crop has already been sold. Most of those sales were to multinational grain companies in exchange for inputs such as fertilizers, chemicals and seed needed to plant the crop. Producers have also sold an estimated 80% of last year's soybean crop as well.

In its August Crop Report, the USDA indicated a smaller 2011 U.S. soybean crop than what had been anticipated by the market. It is expected that this could result in even higher soybean prices and if that does occur, the pace of forward selling in Brazil should increase even further.

Domestic soybean prices in Brazil are significantly higher than they were one year ago. In the city of Cascavel, which is located in western Parana, a sack of soybeans that sold for R$33.90 last July is selling for R$ 40.15 this July. In the city of Sorriso, which is located in central Mato Grosso, a sack of soybeans sold for R$ 29.27 last July and it is now selling for R$ 35.89.

Margins have also been improving for Brazilian soybean producers. The cost of inputs such as fertilizers is higher than last year, but commodity prices have risen even faster.