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May 1, 2018

Brazilian Soybean Farmers very Pleased with Strong Prices

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

The last several weeks have been very good for Brazilian soybean farmers. Soybean prices have improved on the Chicago Board of Trade, soybean prices in the interior of Brazil have improved, premiums at the Brazilian ports are high, and the Brazilian currency has weakened. All of these factors are good news for Brazilian soybean farmers.

As a result, the current soybean prices in Brazil are now the third best in history. That is the assessment of Flavio Franca Junior, the Grain Director at Datagro as reported in Noticias Agricolas. The improved prices are in a large part due to the strong demand for soybeans and the drought in neighboring Argentina that severely impacted the Argentine soybean crop.

This has resulted in surprisingly good selling opportunities for Brazilian farmers, especially given the fact that they have just finished harvesting another record large soybean crop. In a more typical year, this would have resulted in lower prices not stronger prices. Brazilian farmers have sold more than half of the 2017/18 soybean production, but they continue to be cautious sellers in anticipation of even higher prices going forward.

History has taught Brazilian farmers to be patient in selling their soybeans at this time of the year because of potential market volatility due to weather concerns in the United States. There are always potential weather scares in the United States before the crop production is more certain later in the summer. Prices this year could be especially volatile given the short crop in Argentina and a potential trade conflict between the United States and China.

Some of the premiums at Brazilian ports last week were $1.30 over Chicago. Here are a sampling of soybean prices across Brazil as of late last week:

  • Campo Novo do Parecis in far western Mato Grosso R$ 69 per sack (approximately $9.50 per bushel
  • Tangara da Serra in western Mato Grosso R$ 70 per sack (approximately $9.65 per bushel)
  • Sao Gabriel do Oeste in northern Mato Grosso do Sul R$ 72 per sack(approximately $9.91 per bushel)
  • Rio Grande do Sul R$ 80 per sack (approximately $11.00 per bushel)
  • Port of Rio Grande R$ 85.60 per sack (approximately $11.80 per bushel)
  • Port of Paranagua R$ 88 per sack (approximately $12.12 per bushel)