Jan 22, 2010
Early Soybean Harvest Progressing Slowly In Mato Grosso
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
With every break in the rainy weather, the farmers in northern Mato Grosso take advantage of the opportunity and resume harvesting their early-maturing soybeans. In the municipality of Sinop, located in northern Mato Grosso, 5% of the soybeans have been harvested. Soybean yields during early January were a little disappointing, in the range of 35 to 40 bushels per acre. Yields are now improving and they are averaging 50 sacks per hectare or 43 bushels per acre. Statewide, the farmers have harvested approximately 3-4% of their soybeans, which is ahead of last year's pace, but slower than what had been anticipated given the fact that the crop was planted earlier than normal this growing season.
While yields are expected to be good, soybean prices are disappointing. Soybean prices in Mato Grosso are generally 30% less than they were during January of 2009. Prices on the Chicago Board of Trade have slumped recently, but another factor causing the lower prices in Brazil is the currency exchange rate. Last year at this time the Brazilian currency was trading at 2.3 to the dollar and this year it is 1.75 to the dollar.
There is a small glimmer of hope on the horizon for Brazilian farmers as far as the currency is concerned. During the month of January, the Brazilian currency has weakened 7%, while at the same time soybean prices have fallen 12%. It is unclear if this trend will continue, but it is certainly better than if the Brazilian currency had continued to strengthen. They have not quite compensated for each other, but the trend in the currency is encouraging for Brazilian producers.
Transportation and storage costs are also major concerns for Mato Grosso farmers. Last year transportation and storage accounted for 30% the cost of producing soybeans. This year they account for 45% of the cost of producing soybeans in the state. The heavy rains have also left many dirt roads in the state impassable and the situation will not improve until the rainfall diminishes.
In many areas of Mato Grosso, as soon as the early-maturing soybeans are harvested, a second crop of corn is planted. The Mato Grosso Agricultural Economic Institute estimates that the safrinha corn acreage in the state will be 1.7 million hectares and that the total production will be 8.5 million tons. If verified, it would be a new record safrinha corn production for the state. Many producers and grain elevator operators are worried though because 45% of last year's corn is still in the bin and they have already started to harvest what could be a record soybean crop. A lack of storage space will likely develop and elevator operators are anticipating that at least several million tons of safrinha corn production will be piled on the ground as a result.
Due to the declining prices, most Brazilian farmers have not yet sold their 2009-10 soybeans. Nationwide approximately 25% of Brazil's soybeans were forward contracted as of the first part of January. Mato Grosso farmers lead the way with approximately 40% of their anticipated soybean production sold, while farmers in Parana have sold 14% and in Rio Grande do Sul just 9% has been sold.