Mar 23, 2010
Soybean Sales Remain Slow In Brazil
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Brazilian farmers continue to be slow sellers of their 2009-10-soybean crop. Estimates last week put the total sales at only 35% of the total production. There are now indications in Mato Grosso that soybean sales will continue to be sluggish in the state, at least in the near term. Low soybean prices and high freight cost have convinced many farmers in central Mato Grosso to store their soybeans instead of selling it at current prices and paying the high freight costs to move the grain out of the state.
In Sorriso, which is located in central Mato Grosso, soybean prices are R$ 13 per sack less than they were last year and freight cost have skyrocketed compared to last year. The large crop and a lack of trucks to move the crop has resulted in freight costs going from R$ 180 per ton in 2009 to transport the soybeans to the Port of Paranagua or Santos to R$ 220 or R$ 230 per ton today (over US$ 3.30 per bushel). There is a cost associated with storing grain of course, but the farmers calculate that they could pay for the storage just by waiting until freight costs come down.
Storage space is already very tight in central Brazil and if the farmers hold onto their soybean crop until the safrinha corn harvest begins in June, there will defiantly not be enough room for both crops. This could be a particular problem in Sorriso and Lucas do Rio Verde where most of the safrinha corn is produced. The situation becomes even more complicated because the government purchased approximately 85% of the corn produced in Mato Grosso last year, but they have been very slow in transporting the corn out of the state. As a result, a lot of last year's corn crop is still in storage. In all likelihood, much of the 2010 safrinha corn crop in Mato Grosso will be piled on the ground, at least initially.
Brazil is going to produce a record soybean crop in 2009-10, but the infrastructure needed to move the crop has not been improved compared to last year. Just the volume of the crop would result in an extended export season. If you combine the large volume of soybeans produced and the slow selling pace of the crop, it could be a very extended export season in Brazil this year.