Nov 03, 2009
Largest Soybean Producing Municipality In Brazil Wrapping Up Soybean Planting
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The municipality of Sorriso, located in central Mato Grosso, produces more soybeans than any other municipality in Brazil (600,000 hectares). The rainy season started early in central Mato Grosso and soybean planting in the region is 90 to 95% complete, which is about two weeks earlier than normal. Early growing conditions have been favorable and the crop is off to a good start.
According to the Mato Grosso Agricultural Economic Institute (Instituto Mato-grossense de Economia Agropecuaria), the cost of producing soybeans in the region is estimated at approximately R$ 1,606 per hectare with a yield of 50 sacks per hectare or US$ 375 per acre with a yield of 43.5 bushels per acre. Included in that cost is R$ 118.69 for seed (7.3% of the total), R$ 366.16 for fertilizers (22.7% of the total), and R$ 241.90 for chemicals (15% of the total). Any time these calculations are based on a currency exchange rate of 1.73 Brazilian reals per U.S. dollar.
Input costs for soybean production in Brazil have declined compared to last year, but many farmers in Mato Grosso had to purchase their inputs several months ago when prices were higher in order to allow time for delivery. As the planting season winds down in central Mato Grosso, input prices have fallen.
While farmers in the state are pleased that their crop is off to a good start, they are very worried about future prices and the strength of the Brazilian real compared to the U.S. dollar. Current soybean prices in Mato Grosso are barely enough to cover production costs so if the price goes down or adverse weather lowers their yields, they might not be able to cover their costs. The exchange rate also weighs heavy on their minds. If the Brazilian currency continues to strengthen compared to the dollar, it is exactly the same as if the price of soybeans went down. The currency has been strengthening compared to the dollar for about five years and as a result, Brazilian farmers have been getting paid less and less for the soybeans.