June 17, 2016
Record High Prices for Corn and Soy in Mato Grosso during May
The sale of the 2015/16 safrinha corn crop in Mato Grosso advanced to 66% by the end of May according to the Mato Grosso Institute of Agricultural Economics (Imea). This percentage of sales does take into account the recent declines in production, so in reality, the amount of the eventual corn crop that has been sold is greater than 66%.
The price of corn in the state during the month of May averaged R$ 39.28 per sack ($5.10 per bushel), which was 147% higher than the five-year average during May, which was R$ 15.88 per sack ($2.06 per bushel). These prices in dollars per bushel are calculated using the current exchange rate, but the price of corn in dollars per bushel is somewhat deceiving due to the changing exchange rate.
The exchange rate between the Brazilian real and the U.S. dollar has changed significantly over the past few years. Currently, the exchange rate is approximately 3.5 Brazilian reals per dollar, but for most of the past five years, it was much stronger than that. Therefore, the average price in dollars per bushel over the past five years is greater than $2.06 per bushel.
Domestic soybean prices have also strengthened in Mato Grosso. Farmers in the state have sold 91% of their 2015/16 soybean crop and the average price for soybeans during the month of May was R$ 74.36 per sack ($9.65 per bushel), which was an all-time record high for May. The price per sack increased R$ 10.00 per sack just during the month of May.
Farmers have also forward contacted 21% of their anticipated 2016/17 soybean production at an average price of R$ 69.94 per sack ($9.08 per bushel).
For any farmer still holding old crop soybeans, they should have excellent sales opportunities over the next few months. This year in Brazil, the right marketing decision was to hold onto the soybeans as long as possible.