Back
July 17, 2020

Economic Outlook for Brazilian Farmers the Best in Recent Years

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazilian farmers are coming off a very profitable 2019/20 growing season thanks to an approximate 30% devaluation of the Brazilian currency since the first of the year and a strong demand for commodities from China. The devaluation of the Brazilian currency resulted in record high domestic prices for soybeans and corn in Brazil. Brazilian farmers are hoping for another profitable year when they start planting their 2020/21 corn sometime in August and their soybeans starting in mid-September.

The Federation of Agricultural and Livestock Cooperatives of Rio Grande do Sul (Feco/Agro/RS) released a study looking at the cost of production for soybeans and corn in the state for the 2020/21 growing season.

For soybeans, they are estimating that it will cost an average of R$ 3,643 per hectare to produce soybeans in 2020/21 (approximately $285 per acre), which is up 7.7% compared to last year. If the price of soybeans is R$ 103 per sack (approximately $9.25 per bushel), it will take 35.3 sacks per hectare to cover their cost of production or 31.3 bu/ac. This is 29% fewer sacks than last year.

For corn, they are estimating that it will cost R$ 5,034 per hectare to produce corn in 2020/21 (approximately $391 per acre), which is up 9.8% compared to last year. At the current price of corn and with a corn yield of 160 sacks per hectare, it will take approximately 117 sacks per hectare to cover the cost of production or approximately 108 bu/ac. This is 20% fewer sacks than last year.

The President of FecoAgro/RS stated that the cost of production will go up in 2020/21, but that the domestic prices have risen much more than the cost of production resulting in a very positive moment for planting soybeans and corn in the state. His conclusion is that the economic outlook for Brazilian farmers is currently one of the best in recent years.