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May 17, 2012

Nearly All the Old Crop Soybeans have Already been Sold in Brazil

According to the Mato Grosso Institute of Agricultural Economics (Imea), farmers in Mato Grosso have sold approximately 95% of their 2011/12 soybean production, which is 10% ahead of last year's selling pace. At this level of sales, only 1.2 million tons of soybeans remain to be sold in the state. Farmers all across Brazil have also been aggressively selling their 2011/12 soybean crop as well, which has led to concerns that Brazil could essentially run out of soybeans as early as August. Processors normally shut down their operations in November and December for their annual maintenance while they wait for the new crop to become available in January. At the current pace of exports and crush, some processors may have to close down operations several months early this year.

Processors are always anxious to restart their operations as soon as new crop soybeans become available in January. If they close down early this year, they will be even more willing to pay premiums for new crop soybeans early next year. As a result, there may not be enough soybeans in exportable position in Brazil until later in January.

Concerning the 2012/13 soybean crop in Brazil, farmers have been aggressively forward contracting their crop in exchange for needed inputs. In Mato Grosso, approximately 45% of the 2012/13 crop has already been sold, which is a level usually only seen until November after the crop has been planted.