Oct 04, 2021
Cost of Producing 2021/22 Soy in Mato Grosso Equals to 27.7 bu/ac
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
As Brazilian farmers start to plant their 2021/22 soybeans, they are putting in the ground the most expensive soybean crop they have ever planted. While production costs are higher this season, the strong prices of soybeans during the last two growing seasons have more than compensated for the increased costs.
Soybean inputs have increased significantly this year due to several factors including supply chain disruptions, logistical bottlenecks, labor shortages caused by the Covid-19 pandemic, higher interest rates, etc.
According to the Mato Grosso Institute of Agricultural Economics (Imea), the total cost of producing the 2021/22 soybean crop in Mato Grosso is R$ 5,133 per hectare (approximately $400 per acre using an exchange rate of 5.2 Brazilian reals per U.S. dollar), which is up 22% compared to a year earlier. This includes the cost of capital, labor, land rent, etc. At a yield of 50 bu/ac, this would equate to approximately $8.00 per bushel.
Considering just the operational cost, which does not include capital, rent, etc., the cost in 2021/22 is R$ 3,742 per hectare (approximately $291 per acre), which is up 18% compared to the R$ 3,177 per hectare in 2020/21 (approximately $247 per acre). For the 2021/22 growing season, the cost of seed increased 40% and the cost of fertilizers increased 24%,
To cover the operational costs per hectare, a farmer in Mato Grosso would need to sell about 23 sacks per hectare (20.5 bu/ac) at the current spot price of R$ 165 per sack (approximately $14.40 per bushel). To cover the total cost of production per hectare including capital and rent, a farmer in Mato Grosso would need to sell 31 sacks per hectare (27.7 bu/ac) at the current spot price of R$ 165 per sack. Imea is currently estimating the 2021/22 average yield in the state at 57 sacks per hectare (50.9 bu/ac).
Strong prices of soybeans during the last two growing seasons have more than compensated for the increased costs. In September of 2019, the average spot price for soybeans in Mato Grosso was R$ 74.58 per sack (approximately $6.51 per bushel). That increased to R$ 135.09 per sack in September of 2020 (approximately $11.80 per bushel) and it now stands at R$ 165.00 per sack (approximately $14.40 per bushel).
At the start of the 2019/20 growing season, a farmer in Mato Grosso had to sell 52 sacks per hectare to cover the total cost of production. At the start of the 2021/22 growing season, he needs to sell 31 sacks per hectare to cover the total cost of production