December 21, 2017

Soybean Crop in Sorriso, Mato Grosso doing Fine

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

The recently improved weather has farmers in Sorriso, Mato Grosso more optimistic concerning their 2017/18 soybean crop. Sorriso is located in central Mato Grosso and it is the largest soybean producing municipality in Brazil with approximately 600,000 hectares of soybeans (approximately 1.5 million acres).

The president of the local Rural Producers Syndicate feels that if the weather continues to cooperate, the average soybean yield in the municipality would be equal to last year when they produced 58 sacks per hectare (50.4 bu/ac). The most advanced soybeans are flowering and starting to set pods.

As the crop progresses in its development without major concerns, farmers are more willing to forward contract some of their anticipated production. The Mato Grosso Institute of Agricultural Economics (Imea) estimates that farmers in the state have forward contracted approximately 39% of their anticipated soybean production, which is about 9% slower than last year at this time.

While the weather is cooperating with the soybean crop, soybean prices continue to be quite low in the region. The current price of soybeans in Sorriso is in the range of R$ 60.00 per sack or approximately $ 8.30 per bushel. If a producer obtains good yields, he can turn a profit at this price level. If the yields fall to below trend line, producers would be hard pressed to make any money on the soybean production.

Sorriso is also the largest corn producing municipality in Brazil as well. All the corn in Sorriso is produced as a second crop following soybeans and farmers in the region are expected to reduce their safrinha corn acreage this year due to very low corn prices. The current price of corn in Sorriso is in the range of R$ 15.00 per sack or approximately $2.08 per bushel. With an average corn yield, the current price would not cover the cost of production. The only way to make a profit at this price level would be to obtain an exceedingly high corn yield.

As a result, many farmers in the region have already indicated that they are planning to plant more safrinha cotton in place of safrinha corn. While the Brazilian government has not yet estimated the safrinha corn acreage in Brazil, there are estimates in Brazil that it might decline 10-20%.