Aug 28, 2015

Input Sales in Mato Grosso, Brazil Continue to Lag Last Year

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

Farmers in Mato Grosso are generally the first in Brazil to plant soybeans and they will be allowed to start planting their 2015/16 soybean crop on September 15th, which is the end of the soybean-free period in the state. But, with less than 20 days left until the start of planting, 18% of the inputs have not yet been purchased and 40% of the inputs have not been paid for. Fertilizers are the principal input that is lagging behind last year's purchasing pace.

According to the Mato Grosso Institute of Agricultural Economics (Imea), by the end of July of this year, farmers in Mato Grosso had purchased 82% of the needed inputs to plant the 2015/16 soybean crop in the state. At the end of July 2014, farmers in the state had purchased 93% of their needed inputs.

The slow pace of purchasing this year's inputs is being attributed to the delayed availability of credit from the federal government. The 2015/16 Harvest Plan was announced by the Brazilian government on June 2nd of this year, whereas the 2014/15 Harvest Plan was announced on May 19th of 2014. The delay in making new credit available, along with restricted credit earlier this year for advanced purchases of inputs, put the entire process of purchasing inputs behind schedule.

Imea estimates that the delay in purchasing the inputs will increase the cost of producing soybeans in Mato Grosso by R$ 1 billion reals. The reason for the increase is the fact that the Brazilian currency experienced a significant devaluation at the same time that farmers were waiting for their credit. Seventy percent of the fertilizers used in Brazil are imported and a weaker currency makes those imports more expensive, so the delay has made fertilizers more expensive for farmers in Mato Grosso.

Imea is estimating the soybean acreage in Mato Grosso will increase by 2.0% to 9.2 million hectares (22.7 million acres). As a comparison, the soybean acreage in Mato Grosso is approximately equivalent to the soybean acreage in Illinois, Iowa, and half of Indiana combined. The statewide average soybean yield is expected to be 52.6 sacks per hectare (3,156 kg/ha or 45.7 bu/ac) with a total production of approximately 29 million tons.