Home / Markets / Markets Analysis / Brazilian producers still hurting

Brazilian producers still hurting

Agriculture.com Staff 03/23/2006 @ 2:35pm

Harvest is underway and the soybean producer is still in a "world of hurt" in Brazil. The strong Brazilian real continues to mean soybean prices are very low while prices for inputs are high.

This is the third year in a row in some cases that farmers have been pinched. Last year featured a major drought in the south and the year before was dry in the south and excessively wet in the north. Margins for the farmer are now the exact opposite of the situation four years ago when the real was weak, farming was profitable and land was still being cleared for new production.

Before harvest is even completed, there is talk plantings will be down again next season. The agriculture minister Roberto Rodrigues said today that he expects total grain plantings to be down 5 to 6 million hectares. Plantings were down 2 million hectares this year at 47 million hectares. Grains would include corn, soybeans and cotton. Soybean plantings were 22 of the 47 million hectares.

With South American harvest underway, competition for soybean export sales becomes more intense. This week's export sales report once again had a small number for US sales—233,100 metric tons. China only bought 65,000 metric tons and is apparently buying South American supplies.

Chances are the March Cattle-on-Feed report will contain a record number of cattle on feed as of March 1. Placements should be large, estimated at 102.8 percent. The drought in the south has meant that feeder cattle are moving to feedlots at a faster pace. With marketings estimated at 98.5 percent, the on feed total should be around 107.6 percent.

These large numbers have definitely been one of the factors in the $10-12 drop in futures prices. Once the actual numbers are in the market, watch to see whether futures prices attempt to make a bottom. If so, market participants may have adequately anticipated the bearish news.

Harvest is underway and the soybean producer is still in a "world of hurt" in Brazil. The strong Brazilian real continues to mean soybean prices are very low while prices for inputs are high.

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Holiday Profit Taking Pressures Markets