Aug 20, 2014

Forward Sales of Soybeans in Mato Grosso far behind Last Year

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Soybean farmers in Mato Grosso will be allowed to start planting their 2014/15 soybean crop on September 15th when the 90-day soybean free period ends and yet they have only forward sold approximately 8% of their anticipated 27.3 million ton production. According to the Mato Grosso Institute of Agricultural Economics (Imea), soybean farmers in Mato Grosso forward contracted 4.7% of their anticipated production in June and another 3.4% in July for a total of 8%. The forward sales this year are 23% behind the forward sales last year at this time which totaled 31.2% on August 13, 2013.

Farmers in the state generally forward contract a portion of their anticipated production with the grain companies in exchange for needed inputs for their soybean crop (seeds, fertilizers, and chemicals). In exchange for the inputs, farmers generally agree to deliver soybeans to the grain companies the following March, April, or May with March being the primary delivery month.

The reason for the slow sales are the lower international prices for soybeans in anticipation of a record large soybean crop in the United States. Farmers in Mato Grosso still have 6% of last year's soybean crop to sell and Imea estimates that farmers in Mato Grosso have sold their 2013/14 soybean crop for an average price of R$ 54.24 per sack or US$ 11.20 per bushel.