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November 15, 2018

Soybean Forward Contracting in Mato Grosso slowed in October

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

The pace of forward contracting by farmers in Mato Grosso of their 2018/19 soybean production slowed down during the month of October. According to the Mato Grosso Instutute of Agricultural Economics (Imea), the forward sales increased only 1.8% during the month of October to 35.7% of the anticipated 2018/19 soybean production in the state.

The slower pace is being attributed to a number of factors including: a stronger Brazilian real compared to the dollar due to the prospect of Jair Bolsonaro being elected Brazil's next president, farmers focusing on finishing planting their soybeans, and higher freight rates that are impacting logistics for soybean marketing. Farmers are also very cautious in their marketing due to the ongoing trade dispute between the U.S. and China. Soybean prices rise or fall on a daily basis depending on the latest news concerning trade negotiations.

During the month of October, the average forward price for soybeans in Mato Grosso was R$ 65.40 per sack (approximately $8.05 per bushel using an exchange rate of 3.7 reals per dollar).

Farmers in the state have essentially sold out of their 2017/18 soybean crop. Imea is estimating that 97% of last year's soybean crop has been sold and the average price during October was R$ 68.64 per sack (approximately $8.45 per bushel using an exchange rate of 3.7 reals per dollar).