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June 8, 2011

Brazilian Soy Farmers Realize Best Profits in Three Years

In spite of the heavy rains that delayed the soybean harvest in central Brazil, soybean farmers in the region are coming off a very good year as far as profit margins are concerned. According to the Association of Soybean and Corn Producers in Mato Grosso (Aprosoja) the higher soybean prices coupled with lower input costs have resulted in profit margins in 2010/11 much superior to those in 2009/10.

A recent study released by Aprosoja indicated that soybean farmers in Mato Grosso realized an average profit on their soybean production of R$ 638 per hectare in 2010/11 compared to R$ 162 per hectare in 2009/10 (excluding interest payments and taxes). Soybean prices received by the farmers in the state were the highest in the last three years, averaging approximately R$ 35.00 per sack of 60 kilograms compared to R$ 29.30 per sack in 2009/10.

The lower cost of production also helped to drive up the profit margins. The cost of producing one hectare of soybeans in Mato Grosso in 2010/11 was estimated at R$ 990 per hectare compared to R$ 1,054 last year and R$ 1,376 two years ago. The actual input cost per hectare (seed, fertilizers, chemicals) was R$ 730 per hectare in 2010/11 compared to R$ 765 last year and R$ 1,300 two years ago.

Farmers in Mato Grosso are flush with cash and as a result, they have been very aggressive in purchasing their inputs for the next growing season and selling part of their anticipated 2011/12 soybean production. For the next growing season farmers have already purchased 80% of their inputs (seed, fertilizers, chemicals) and they have already forward sold 18% of the anticipated 2011/12 production. Both the input purchases and the forward selling is running at a record fast pace in 2011. In some of the prime production regions of Mato Grosso like Sapezal and Sorriso, farmers have already purchased 90% of their inputs. Just chemical sales in Mato Grosso alone are expected to reach R$ 1.4 billion, which is 8.5% more than last growing season.

Farmers all throughout Brazil are renewing their efforts to increase their soybean yields due to new regulations that make it harder to clear new land for increased production.