Aug 12, 2021
Brazil Farmers are Slow to Forward Contract their 2021/22 Soybeans
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Brazilian farmers have been more cautious in forward contracting their 2021/22 anticipated soybean production compared to last year when Brazilian farmers had sold 40% of their anticipated production by this time even though prices were lower than they are today.
According to the consulting firm Safras & Mercados, farmers have sold 23.7% of their anticipated 2021/22 soybean production compared to 43.3% last year and 20.6% average. The reason for the slower selling is the belief that soybean supplies will remain tight worldwide, which could result in higher prices moving forward. The Brazilian currency could also weaken in the months ahead, which would also support domestic soybean prices.
Brazilian farmers also learned a valuable lesson last year when they missed out on higher prices by forward contracting too much of their anticipated production. At the time they sold their soybeans, they were satisfied with the forward contract price, but domestic soybean prices doubled by the time they harvested their soybeans, but at that point, most of their production had already been sold.
Farmers in Brazil are expected to increase their soybean acreage in 2021/22 to take advantage of strong soybean prices. Safras & Mercado is estimating that the Brazilian soybean acreage in 2021/22 will increase to 39.8 million hectares (98.3 million acres) and that Brazil will produce 142.2 million tons of soybeans. The consulting firm Patria Agronegocios estimates that the soybean acreage will increase 6.7% to 40.8 million hectares (100.7 million acres), with an average yield of 59.06 sacks per hectares (56.3 bu/ac) resulting in a production of 144.7 million tons.