Brazil soy producers sell crop at record pace
Brazilian farmers have never sold soybeans so fast and so soon as they have this year.
The new 2007/08 crop planting starts in late September, but 27% of estimated production of 63.3 million tons was already sold as of August 10, according to agribusiness consulting firm AgRural. In September 2006, when the company issued its first numbers for 2006/07 season, only 6% of the crop was sold.
Better soybean prices and higher costs of production explain this forward-pricing. In Pananagua, a port in southern Parana state (number 2 soybean producer in Brazil), the new-crop price is at US$ 18.80 per 60 kg bag, up 39% from last year's US$ 13.50.
More conservative and capitalized, southern producers don't usually sell before planting, but this year prices are so good (even with strong Brazilian currency) that Parana already sold 30% of its new crop, against 3% one year ago. With an important export port and smaller logistic problems than other states, producers in Parana can see a 40% profit margin in 2007/08, according to AgRural.
In Mato Grosso, Brazil's largest soy producer state , 42% of the new crop is sold, up from last year's 11%. In Sorriso, northern Mato Grosso, a 60 kg bag is at US$ 13 for delivery between March and May 2008, 67% up from last year's US$ 7.80.
"After lower prices, heavy losses and accumulated debts in 2004/05 and 2005/06 crops, farmers don't want to run risks. They see good prices, they see a 15% profit margin in Mato Grosso, so they sell their beans in advance. Furthermore, they need money to plant the new crop, they need to buy inputs, and these sales help a lot because farmers buy the inputs now and pay for them with the future production," says Seneri Paludo, a market analyst with AgRural in Mato Grosso. AgRural estimates Brazil's 2007/08 soybean planted area at 22.8 million hectares (56.2 million acres) and production at 63.3 million tons, up 7% from 2006/07.
According to ANDA (National Association of Fertilizer Distributors), Brazilian farmers bought record 11.6 million tons of fertilizers from January to July, 55% up from the amount sold in the year-ago period, when the debt crisis was worst and money was scarce. The rhythm of sales is likely to slow down in coming months, because there is no sufficient credit and logistics to supply much more fertilizers this year. But ANDA expects a record 23.5 to 24 million tons in 2007, up 12% - 14% from last year's 21 million tons and 3% - 4% up from record 22.8 million tons sold in 2003 and again in 2004.
Big soybean producers in Mato Grosso led the fertilizers demand increase in the seven first months of this year. They use to start buying fertilizers in July, but this year some of them (especially those with less debts) bought in February, trying to avoid high prices. According to AgRural, fertilizer prices are up 37% from last year in Mato Grosso. "But farmers that bought early have spent less, because prices were not so high in the first quarter of the year," says Paludo.