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October 24, 2013

Farmers in Mato Grosso Plant Record Amount of Soy in One Week

Farmers in Mato Grosso have planted approximately 30% of the intended 2013/14 record large soybean crop, which is about 5% slower than last year's pace. Farmers planted 1.5 million hectares during the past week alone (18% of the total 8.2 million hectares in the state), which set a record for the number of hectares planted in one week.

Planting a record number of hectares in one week is both good and bad. The good news is that the earlier the soybeans get planted, the more time there is early next year to plant a second crop of corn or some other crop. The bad news is that there will also be a record amount of soybeans ready to harvest all at the same time. These soybeans planted in mid-October will be ready for harvest during the second half of January, which can be a very rainy period in Mato Grosso. Soybean farmers always live with the possibility that heavy rains during January have the potential to delay the soybean harvest and result in poorer quality seed and as well as lower yields.

The Mato Grosso Institute of Agricultural Economics (Imea) reported that farmers in the state have forward contracted 41% of the anticipated 25.7 million ton production in 2013/14. The selling pace is a little slower than the five-year average and certainly slower than the 63% that was sold last year at this time.

Farmers are slow seller because they are hoping for improved prices. During the past month, the average price for forward sales in the state averaged about R$ 50.00 per sack or US$ 10.33 per bushel. In the cities of Primavera do Leste and Campo Verde in southeastern Mato Grosso, domestic soybean prices last week were in the range of R$ 44.50 to R$ 46.00 per sack of 60 kilograms (approximately US$ 9.19 to 9.50 per bushel). For most farmers, these prices are right at the breakeven point because Imea estimates that the average cost of production for soybean producers in Mato Grosso is R$ 46.00 per sack based on an average yield of 52 sacks per hectare (3,120 kg/ha or 45 bu/ac). The prices seem low by U.S. standards because the average cost of transporting a bushel of soybeans from central Mato Grosso to the ports in southern Brazil is approximately US$ 2.50 per bushel.

Production costs in Mato Grosso have risen on average 23% compared to last year due mainly to increased fertilizer and chemical costs. Many farmers are also worried that their costs may increase even further due to the added expense of controlling a new pest in the state - the corn earworm. No one knows for sure how this new pest will impact production costs and the yield potential, but the pest caused losses of approximately US$ 1 billion to the crops in western Bahia last growing season.