Jun 21, 2010
Soybean and Corn Prices Not Very Encouraging for Brazilian Farmers
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Soybean farmers in Mato Grosso just finished the growing season with the lowest profits in four years. Profits this year are averaging R$ 140 per hectare (US$ 56 per acre) compared to R$ 150 per hectare (US$ 60 per acre) for the 2008-09 growing season. The main reasons for the lower profitability are lower commodity prices and a stronger local currency.
The average cost of production for soybeans in Mato Grosso during the 2009-10 growing season is estimated at R$ 1,493 per hectare or approximately US$ 7.50 per bushel based on an yield of 43.5 bushels per acre. The average profit margin for soybean production in Mato Grosso averaged approximately 9.3%. The cost of growing soybeans fell last year due to primarily lower fertilizer costs, but they did not fall enough to compensate for the lower soybean prices and stronger currency. Their cost have fallen due to lower fertilizer costs, but not enough to compensate for the lower commodity prices and stronger currency. Historically soybean profits in the state have averaged between 10-15%.
The cash prices for corn in Mato Grosso is even more discouraging. Even though the price for corn has increased during the last month, it is still significantly below the minimum price. In central Mato Grosso, the cash price for corn is averaging R$ 10.50 to R$ 11.50 per sack (US$ 3.00 to US$ 3.25 per bushel), which is significantly below the government's minimum price of R$ 13.95 a sack or US$ 3.95 per bushel). The government is buying the corn at weekly auctions and the farmers are only willing to sell to the government making it nearly impossible for local grain companies to buy the corn in the cash market.
The cash prices for corn in Mato Grosso is even more discouraging. Even though the price for corn has increased during the last month, it is still significantly below the minimum price. In central Mato Grosso, the cash price for corn is averaging R$ 10.50 to R$ 11.50 per sack (US$ 3.00 to US$ 3.25 per bushel), which is significantly below the government's minimum price of R$ 13.95 a sack or US$ 3.95 per bushel). The government is buying the corn at weekly auctions and the farmers are only willing to sell to the government making it nearly impossible for local grain companies to buy the corn in the cash market.