Feb 23, 2023

Cooperative Renting Storage Space Due to Large Crop, Slow Selling

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

Members of the cooperative Coamo Agroindustrial in the state of Parana in southern Brazil are expected to harvest a record soybean crop in 2023 and that could cause a storage problem for the cooperative. Some of their storage units are still full of last year's soybeans because farmers have been slow seller while they wait for higher prices.

Even though the 2021/22 crop was smaller than normal due to adverse weather, farmers sold their soybeans for a good price allowing them to retain a portion of the crop waiting for improved prices. As a result, the cooperative is renting additional storage space and planning on purchasing additional silo bags to handle the expected volume.

Coamo is Brazil's largest agricultural cooperative with headquarters in Campo Mourao in western Parana and 30,700 members in the three states of Parana, Santa Catarina, and Mato Grosso do Sul. They are expecting their members to harvest 6 million tons of soybeans compared to 3.18 million last year. In 2022, Coamo received a total of 7.47 million tons of grain which represented 2.8% of Brazil's total grain production.

Members are allowed to store their grain at the cooperative even though they have not sold the grain. Members have forward contracted approximately 5% of their anticipated 2022/23 soybean production compared to 25% to 30% last year at this time.

Soybean prices in Parana started 2022 at approximately R$ 162 per sack (approximately $14.16 per bushel) but quickly surged to R$ 200 per sack (approximately $17.50 per bushel) during the harvest due to the onset of the war between Russia and Ukraine. Once the harvest was complete, prices returned to pre-harvest levels. Members are slow sellers this year hoping for a repeat of last year's prices.

This same storage problem is happening across Brazil. The 2022/23 grain production in Brazil will be significantly larger than the country's grain storage capacity. Therefore, many grain facilities are scrambling to secure additional grain storage capacity.