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September 19, 2018

Conventional Soybean Acreage in Mato Grosso to Decline in 2018/19

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

Brazil is the only major soybean producer in the world that still has a sizable production of conventional soybeans (non-GMO), but the enthusiasm for conventional soybean production seems to be softening. Brazil's conventional soybeans are almost exclusively grown in the western part of the state of Mato Grosso and exported out of one port on the Madeira River, which is a western Tributary to the Amazon River.

During the 2017/18 growing season, approximately 17% of the soybean acreage in Mato Grosso was devoted to conventional soybeans. The organization that promotes the use of conventional soybeans (soybean Free Institute), estimates that during the 2018/19 growing season, approximately 10-12% of the soybean acreage in the state will be devoted to conventional soybeans.

The reason for the decline appears to be higher costs to grow conventional soybeans and a lack of a firm market.

The Soybean Free Institute estimates the cost of producing conventional soybeans in Mato Grosso is R$ 3,975 per hectare (approximately $7.85 per bushel assuming a 50 bushel yield and an exchange rate of 4.1 reals per dollar). This is 3.8% higher than the cost of producing GMO soybeans, which is R$ 3,830 per hectare (approximately $7.56 per bushel assuming a 50 bushel yield and an exchange rate of 4.1 reals per dollar).

Farmers receive a premium of about R$ 10 per sack for their conventional soybeans (approximately $1.10 per bushel) in order to cover their higher costs. Conventional soybeans cost more to produce because they require more insecticide applications and a different and more expensive herbicide regime. They are also more expensive because the identity of the conventional soybeans must also be preserved throughout the production and transportation system.

The conventional soybeans produced in Brazil are exported to Europe and Asia.