Aug 10, 2010
Waiting to Sell Was the Correct Strategy for Brazilian Soybean Farmers
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
One of the toughest decisions for any farmer is to decide when to sell their crops. In Brazil it's no different. For the last several years, soybean farmers in Brazil have been conditioned to expect some type of weather scare during the U.S. summer growing season that would result in a spike in soybean prices. This year it happened again, but this time it was poor weather in Eastern Europe instead of North America that did the trick.
In Parana for example, the price for a sack of soybeans increased R$ 4 during the month of July (approximately a dollar per bushel). At the start of the month, soybeans were selling for R$ 32 a sack (US$ 8.30 per bushel) and by the end of the month, it had increased to R$ 36 a sack (US$ 9.40 a bushel). At the Port of Paranagua, soybean prices are even better with exporters offering R$ 43 per sack (US$ 11.15 per bushel). In order to assure ample quantities for shipment, exporters were offering a premium of US$ 1 per bushel over the Chicago Board of Trade price.
The price increase is certainly good news for farmers who still have some of last year's crop to sell and it is also good news for next year as well. State officials in Parana estimate that about one third of last year's crop remains to be sold and analysts in Brazil are advising their clients that now is the right time to wrap up last year's sales.
August is also a key month for Brazilian farmers to forward sell some of their anticipated production in exchange for the purchase of needed inputs. While the international grain companies are doing less of this forward contracting this year compared to past years, it's still an important part of the marketing plan for Brazilian soybean farmers.