Mar 16, 2010
While Gross Farm Receipts Will Be Higher In Brazil, They Will Be Down In The Center-West Region
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Farmers in central Brazil are concerned about the decline in their farm's gross receipts in 2010. According to the Minister of Agriculture, the gross receipts for the top 20 crops in Brazil will total R$ 161 billion in 2010, which is 3.2% more than in 2009. Unfortunately, the picture is not as positive for farmers in Mato Grosso where the gross receipts for the principal crops are expected to decline 7.5% compared to 2009. In only two regions of Brazil, the Center-West and the North, are gross receipts expected to decline in 2010, 3.1% and 5.7%, respectively.
The problem in the center-west region is the fact that the two principal crops grown there, which are soybeans and corn, are in a down cycle. In central Mato Grosso, soybeans are currently selling for approximately R$ 28 per sack whereas a year ago the price was R$ 38 per sack. The situation for corn is even worse. A sack of corn in central Mato Grosso is currently selling for R$ 9 per sack (or less) when the minimum price set by the government is R$ 13.98 per sack and the cost of production is approximately R$ 11 per sack. In Mato Grosso, the gross receipts per hectare are expected to decline R$ 500 from R$ 1,941 during the 2008-09 growing season to R$ 1,440 during the 2009-10 growing season or a decline of 34%.
The decline in soybean price is primarily the result of increasing world supplies, but Mato Grosso has had a unique set of problems this year as well. The yields of the early maturing soybeans were disappointing due to the heavy rains during December and January. High moisture during harvest resulted in increased drying costs and discounts at the grain elevator due to poorer seed quality. In addition, freight costs have soared this year due to a lack of trucks and alternative means of transporting the crop.
While gross receipts will be down for soybeans, it's going to be worse for corn. Baring an unforeseen weather problem in the U.S., domestic corn prices in Brazil are not expected to recover in 2010. In fact, prices could fall even further due to a lack of adequate storage space in central Brazil.
The farmers in the states of Parana and Rio Grande do Sul will probably have beter gross receipts than in any other region of Brazil. They are poised to harvest record soybean and corn crops and they have some of the lowest transportation costs in all of Brazil.