April 23, 2018

Soybean Prices remain Strong in Brazil

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

While farmers in the U.S. are struggling to get started on their spring planting, farmers in Brazil are wrapping up their 2017/18 soybean harvest with relatively strong soybean prices. Soybean prices in Brazil have strengthen in recent weeks due to a number of factors including: a drought in Argentina that severely reduced soybean production, an impending trade dispute between China and the U.S. with the potential for a 25% tariff on U.S. soybeans going to China, and a weaker Brazilian currency due primarily to political instability in Brazil.

Brazil's 2017/18 soybean production is expected to be a new record in the range of 115 to 116 million tons and Brazil is expected to export 70 to 71 million tons of soybeans in 2018 and crush 43 to 44 million tons. If these estimates turn out to be accurate, the Brazilian soybean carryover will be relatively small by the time the 2018/19 crop is harvested in early 2019.

Up until this point, Brazilian farmers have been relatively slow sellers of their soybeans in the hope of better prices. They now have stronger prices and farmers have started to sell more of their 2017/18 production. Even with the increased sales pace, the competition between exporters and crushers for available soybean supplies has resulted in premiums at some Brazilian ports of up to $1.90 above the Chicago Board of Trade.

Market analysts in Brazil are advising farmers that prices should remain strong for the remainder of 2018 especially if a weather concern develops during the U.S. growing season

Two weeks ago, soybean price at Brazilian ports peaked to the range of R$ 87 to R$ 88 per sack (approximately $11.98 to $12.12 per bushel), but it has since weaken a bit to generally R$ 85 per sack (approximately $11.70 per bushel). The prospect for a slightly stronger Brazilian currency probably caused a little price weakening.

In the interior of Brazil, soybean prices have weakened a bit over the past few days, but they are still relatively strong. Here are a sampling of soybean prices in the interior of Brazil as of last Friday.

  • Rondonopolis, Mato Grosso R$ 70.00 per sack (approximately $9.65 per bushel).
  • Primavera do Leste, Mato Grosso R$ 70.00 per sack (approximately $9.65 per bushel).
  • Sorriso, Mato Grosso R$ 68.00 per sack (approximately $9.36 per bushel).
  • Chapadao do Sul, Mato Grosso do Sul R$ 72.00 per sack (approximately $9.91 per bushel).
  • Balsas, Maranhao R$ 73.00 to R$ 75.00 per sack (approximately $10.05 to $10.33 per bushel).
  • Carazinho, Rio Grande do Sul R$ 80.50 (approximately $11.08 per bushel).
  • Interior Parana R$ 82.00 per sack (approximately $11.29 per bushel).

At these price levels, nearly every Brazilian soybean farmer will make money selling their soybeans especially if they had very good yields. Prices could improve going forward especially if there is a weather concern in the U.S. over the next few months.