January 15, 2015

Soybean Forward Sales Increase in Brazil, still Lag Last Year

Brazilian farmers have picked up the pace of forward contracting for their anticipated 2014/15 soybean crop, but the sales are still lagging last year's pace. Farmers sold more soybeans during the month of December than during any other month since sales began in June. According to AgRural, Brazilian farmers had sold 31% of their anticipated 2014/15 soybean production by the end of December comparted to 43% by the end of December 2013.

Mato Grosso is the largest soybean producing state in Brazil and farmers in the state had sold 45% of their crop by the end of December compared to 55% last year according to the Mato Grosso Institute of Agricultural Economics (Imea). For the entire center-west region of Brazil, farmers have sold 38% of their 2014/15 crop compared to 51% by the end of December 2013.

Farmer sales were slow due to low prices resulting from a record large soybean crop in the United States. International soybean prices have improved over the last two months and the Brazilian currency has weakened compared to the dollar resulting in a price recovery for Brazilian farmers.

The early soybean harvest is underway in Mato Grosso where 2% of the crop has been harvested. Imea is estimating that approximately 6% of the crop will be harvested by the end of January, which is slower than average. Early soybean yields are variable in the range of 30 to 56 bu/ac (2,100 to 3,840 kg/ha).

In the state of Parana farmers have harvested 1% of the soybeans and the Secretary of Agriculture in the state is estimating that 3% of the soybeans will be harvested by the end of January compared to an average of 6%. The early soybean yields in Parana are also variable in the range of 29 to 57 bu/ac (1,980 to 3,960 kg/ha).

Domestic soybean prices for March delivery, which is the most common delivery month for farmers in Mato Grosso, are in the range of US$ 10.25 to US$ 10.30 per bushel, which are certainly better than what had been expected several months ago.

Farmers able to deliver soybeans by the end of January can anticipate prices in Mato Grosso in the range of R$ 52 to R$ 57 per sack whereas if delivery is delayed until October, the price drops precipitously to R$ 40 per sack.