May 3, 2012

Soybean Seed Sales in Brazil for 2012/13 Crop at Record Pace

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

Record high soybean prices are encouraging farmers in Brazil to sell their current soybean production, forward contract their anticipated 2012/13 production, and purchase their needed seed inputs for the 2011/12 growing season at a record pace. Even though soybean seed prices have risen 30% in Brazil compared to last year, some of the most popular soybean varieties in Brazil are already sold out even though planting will not start for at least another five months.

The Coamo Cooperative in western Parana usually starts their annual "Harvest Program" in June or July, where their members can purchase the inputs needed for the next growing season. This year though, the program had already been started at the end of April and according to the technical director of the cooperative, by the end of the first week of May, they expect that 85% to 90% of the seed needed for the 2012/13 crop will have already been purchased.

The demand has been so strong for the hottest new soybean varieties (those with the newest technological traits) that they expect that they will only be able to meet 80% of the demand and that 20% of their seed sales will be of older soybean varieties. The cooperative expects to sell 1.1 million sacks of soybean seed (50 kilograms each) for the 2012/13 growing season.

One of the reasons for the earlier-than-normal purchases is the fact that producers are also expecting the seed prices to continue rising due to the strong demand and they want to secure their seed supplies early as possible. According to the Brazilian Seed and Seedling Association (Abrasem), soybean varieties that sold for R$ 1.40 to R$ 2.00 per kilogram last growing season are selling for R$ 2.00 to R$ 3.00 per kilogram this growing season.

The drought during this past summer reduced the seed supply somewhat in southern Brazil, but the seed companies feel that even though supplies will be tight, they feel that there will be enough seed to meet the anticipated larger soybean acreage in 2012/13.

Parana, which is the second largest soybean producing state in Brazil, will need to import one-third of its seed needs from other states. The Parana Seed and Seedling Association (Apasem) also feels the seed supplies will be tight, but there will be enough to meet the demand.

The recent trend in Brazilian soybean production has been to plant early-maturing soybean varieties which allow enough time to plant a second crop of safrinha corn, therefore, the early-maturing soybean varieties (90 to 95 day maturity) are in the greatest demand. Agronomist though are advising farmers in Parana to plant a range of maturities so that they spread out their risk from potentially adverse weather during the next growing season.

As far as pricing of the crop is concerned, two thirds of the old crop in Parana has already been sold and farmers have already starting forward contracting their 2012/13 crop as well. Estimates are that farmers in Parana have already sold nearly one million tons of their anticipated 2012/13 soybean production.