Apr 25, 2019
Farmers in Rio Grande do Sul like their Soy Yields, but not Soy Prices
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Farmers in Rio Grande do Sul in southern Brazil are in the final stages of harvesting their 2018/19 soybeans. They are generally pleased with their yields, but they are not happy about the slumping soybean prices.
Emater/RS estimates that approximately 80% of the 5.8 million hectares of soybeans have been harvested and that the statewide yield will be 3,196 kg/ha (47.3 bu/ac), which is 4.9% higher than last year's yield of 3,047 kg/ha (45.0 bu/ac). The 2018/19 soybean production in Rio Grande do Sul is now estimated at 18.5 million tons, which makes it the second leading soybean producing state in Brazil behind Mato Grosso.
Traditionally, the state of Parana is the second leading soybean producer in Brazil followed by Rio Grande do Sul, but dry weather in Parana earlier in the growing season reduced the 2018/19 soybean crop to 18.3 million tons, putting it behind Rio Grande do Sul.
While farmers in Rio Grande do Sul are happy about their soybean yields, they are not happy about the prices being offered for their soybeans. The current soybean price in Rio Grande do Sul is in the range of R$ 68 per sack (approximately $8.13 per bushel), which is significantly below last year at this time when prices were in the range of R$ 83 per sack (approximately $9.92 per bushel).
Commodity advisors in Brazil have mixed opinions about what farmers should do with their unsold soybeans. Some are advising their farmer clients to put off any further sales in the hope of better prices. Others are advising farmers to take advantage of a weaker Brazilian currency and sell their remaining soybeans because prices could move lower going forward.
The Brazilian real is currently trading at almost 4.00 to the dollar, but it could strengthen to as much as 3.50 to the dollar if pension reforms are approved by the Brazilian Congress. Any time the Brazilian currency strengthens, it generally leads to lower grain prices in the interior.
Regardless of which opinion you trust, marketing opportunities in Brazil are very poor at the current time with no signal that prices will improve any time soon.