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June 2, 2017

Conventional Soy Production in Mato Grosso to increase in 2017/18

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

As Brazilian farmers start preparing for their 2017/18 soybean crop, there are indications that farmers in Mato Grosso will plant more conventional soybeans compared to last year. The 2016/17 Brazilian soybean crop was 96% GMO soybeans, but a niche market continues to exist for conventional soybeans (non-GMO), especially in Europe.

The Soybean and Corn Producers Association of Mato Grosso (Aprosoja-MT) estimates that 10% or the 2016/17 soybean crop in Mato Grosso was conventional soybeans and that it will increase to 15% in 2017/18.

The reason for the increased interest is based mainly on economics. Conventional soybeans command a premium and during the last growing season, the premiums ranged from R$ 7 per sack to R$ 18 per sack or $1.00 to $2.55 per bushel. At times of low international commodity prices, these premiums are very attractive.

They are so attractive in fact, that farmers in the state are already forward contracting their conventional soybean production for the 2017/18 growing season. Buyers also want to make sure there will be enough supplies of conventional soybeans to meet their customer's needs. Last week in Mato Grosso, conventional soybeans were forward contracted for R$ 74 per sack ($10.50 per bushel) compared to GMO soybeans that were being contracted for R$ 58.00 per sack ($8.25 per bushel).

While the scenario looks positive for conventional soybeans, the overall situation for soybean production in the state is uncertain. The president of Aprosoja, Endrigo Dalcin, feels the soybean acreage in the state may hold even in 2017/17 or actually decline slightly due to the low prices. He feels that some of the less productive areas may not get planted or planted to a crop other than soybeans.

The Mato Grosso Institute of Agricultural Economics (Imea) is estimating that the soybean acreage in the state will increase 0.2% in 2017/18, but the yields will decline resulting in a crop that is 2.08% lower in 2017/18.