Mar 18, 2010
Brazilian Soybean Farmers Have Sold Only 35% Of Their Crop
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Even though Brazilian farmers will produce a record soybean crop in 2009-10, they have been very slow to sell their soybeans. It is estimated that only about 35% of the crop has been priced. During late 2009 and early 2010, soybean sales in Brazil were extremely slow due to the low prices being offered by the processors and exporters. In fact, they only priced 3% of their crop during the month of February, which is the lowest amount of pricing per month since the 2005-06 growing season. Sales have only recently started to pick up as the harvest is approaching the half way mark, but they are still only selling what is needed for their immediate cash flow.
If you combine the current soybean price and the currency exchange rate, many farmers in Brazil will barely break even on this year's crop. In March of 2009, a sack of soybeans was selling for more than R$ 40 in Mato Grosso and more than R$ 50 in Parana. Today, that same sack is selling for approximately R$ 26 to 28 in Mato Grosso and R$ 35 to 38 in Parana. If a farmer produces an average soybean yields this year, he will probably break even or make a little money. If they have below average yields, then they could loose money on their soybeans this year.
Last year, farmers in Brazil sold their soybeans at higher prices and the Brazilian currency was trading at approximately 2:1 compared to the dollar. This year, the soybean prices are lower and the Brazilian currency is trading at 1.8:1. A strong currency is bad news for Brazilian farmers because they put less money in their pocket for each sack of soybeans they sell when the local currency is strong.
Premiums were being offered in the soybean market as recently as two months ago, but farmers were hesitant to sell their soybeans at that time. Now that the harvest is in full swing, those premiums are gone of course, and they probably won't return until later in 2010.