Nov 02, 2010
Strong Soybean Prices Accelerate Forward Selling in Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
While many farmers in central Brazil spent the month of October waiting for enough rain to start planting their soybean crop, they continued to be aggressive sellers of the 2010/11 soybean crop which they had not yet planted. Estimates are that approximately 45% of the 2010/11 soybean crop in Mato Grosso has already been sold compared to just 27% last year at this time.
Strong soybean prices all across Brazil have encouraged farmers to hedge a significant portion of their crop. In Passo Fundo in Rio Grande do Sul, the average soybean price during September was R$ 43.02 a sack (US$ 11.50 a bushel) and it increased to R$ 44.87 during October (US$ 11.99 a bushel). In Cascavel in western Parana, the September price was R$ 41.40 a sack (US$ 11.06 a bushel) and the October price was R$ 44.41 (US$ 11.87 a bushel). In Rondonopolis in southeastern Mato Grosso, the soybean price went from R$ 40.52 a sack (US$ 10.83 a bushel) in September to R$ 43.16 in October (US$ 11.54 a bushel).
One of the reasons for the strengthening soybean prices was the delayed start to planting in central Brazil. Rainfall during October was spotty in central Brazil, but the rainfall frequency over the last week has improved and as a result, the planting pace has accelerated. Planting in Mato Grosso still remains slow at 33% complete compared to 57% last year and 44% on average.
In contrast to the quick selling of the 2010/11 soybeans, farmers in Mato Grosso are still trying to sell last year's corn production. Farmers are waiting for one last governmental auction at which they can sell their corn to the government under the PEP program. Numerous auctions have already been conducted, but it wasn't enough to purchase all the corn in the state. Farmers want to sell to the government at the guaranteed minimum price of approximately US$ 3.95 a bushel and then let the government pick up the transportation cost of moving the corn out of the state.
There are still 1.4 million tons of corn in private hands in the state and 2.8 million tons in government warehouses. All this corn needs to be moved out before the new soybean harvest begins in January.