Jul 28, 2023

Plummeting Prices in Early 2023 Bad for Brazilian Soy Producers

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

After two very lucrative growing seasons in a row, the end of the 2022/23 Brazilian growing season is turning out to be a bust as far as profits are concerned. Soybean yields across Brazil were generally very good, but the plummeting prices really hurt farmers who had not forward contracted a significant portion of the 2022/23 anticipated production.

The average soybean price in Brazil during the first semester of 2023 was down approximately 30% with some months down as much as 40%. In the words of Flavio Roberto de Franca Junior, chief grain analysts for the consulting firm DATAGRO, "holding soybeans to sell later was a terrible decision between January and June of 2023 and it will continue to be a bad decision for the next few months."

Up until July 7th, Brazilian farmers had sold 66% of their 2022/23 soybean production compared to 77% last year, 91% in 2020, and 80% average according to DATAGRO.

Farmers who got burnt the most were those who did not forward contract their anticipated production late in 2022 or early in 2023 when prices were much higher. Farmers who forward contracted some of their production will turn a profit on their 2022/23 crop. Farmers who did not forward contract some of their anticipated production will probably end up losing money.

Going forward, the current low prices for both soybeans and corn are expected to turn Brazilian farmers more cautious concerning their 2023/24 crops. The 2023/24 Brazilian soybean acreage may increase 1-3%, which would be one of the smallest increases in the last 17 years. Domestic corn prices are even more discouraging than soybeans and the 2023/24 Brazilian corn acreage may increase only 0-2%.

Brazilian farmers will start planting their first corn crop in southern Brazil in late August or early September depending on the weather. Farmers in the state of Parana will be allowed to start planting their 2023/24 soybeans on September 11th. Farmers in the states of Mato Grosso, Mato Grosso do Sul, Sao Paulo, Rondonia, and parts of Para may start planting soybeans on September 16th.