October 30, 2017

Margins on Soy Production in Mato Grosso in 2017/18 will be Tight

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

Margins on soybean production are going to be very tight in Mato Grosso this year and every day they have to wait to plant means that their small margins might get even small. A delay in the soybean planting could mean higher costs due to additional fungicide and insecticide applications to control soybean rust and insect pests. Soybean yields might also eventually decline as well as seed quality. Additionally, every day that the soybean planting is delayed means another day that the safrinha corn planting will be delayed, which could result in potential problems for the safrinha corn crop.

The soybean price in Mato Grosso for March 2018 delivery is in the range of R$ 56.80 per sack (approximately $8.15 per bushel). According to Imea, the variable cost for this crop is R$ 51.71 per sack (approximately $7.40 per bushel). To break even this year, farmers in the state need to produce a minimum of 50 sacks per hectare (43.5 bu/ac). Imea is estimating that the average yield in the state will be 54.1 sacks per hectare (47.0 bu/ac).

As you can see, there will be little room for error this growing season if farmers in Mato Grosso hope to make a profit on their soybean production. Last year at this time, soybeans were being forward contracted in Mato Grosso for R$ 70.73 per sack or approximately $10.20 per bushel.