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August 26, 2016

Cost of Producing Soy in Mato Grosso do Sul to increase 11%-12.5%

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

As Brazilian farmers prepare to plant their 2016/17 crops, they continue to be concerned about the increased cost of producing their 2016/17 soybean crop. According to Embrapa economists in the state of Mato Grosso do Sul, which is located in the center-west region of Brazil, the cost of producing the 2016/17 soybean crop is expected to increase 11% to 12.5% depending on the type of soybeans grown.

According to a report by Brasil Agro, the cost of producing non-GMO soybeans is expected to increase 12.5% from R$ 2,474 per hectare in 2015/16 to R$ 2,785 per hectare in 2016/17. In dollars per bushel, the cost was $6.95 per bushel in 2015/16 and it will be $7.80 per bushel in 2016/17. These calculations are based on a yield of 45 bushels per acre and an exchange rate of 3.2 Brazilian reals per dollar.

The cost of producing Roundup Ready soybeans is expected to increase 11% from R$ 2,452 per hectare ($6.90 per bushel) to R$ 2,721 per hectare ($7.65 per bushel). The cost of producing Intacta soybeans is expected to increase 11.2% from R$ 2,594 per hectare ($7.29 per bushel) to R$ 2,886 per hectare ($8.11 per bushel),

Intacta soybeans contain the Bt gene that protects the plant from insect damage. The cost of growing Intacta soybeans is higher than the other types of soybeans even though the amount of insecticide needed to produce the crop is greatly reduced. The higher costs are due to the higher price of the seed and the required royalty payment.

Embrapa estimates that for farmers who grow non-GMO soybeans, the cost per sack would be approximately R$ 55.69 (approximately $7.91 per bushel) and a farmer would need to harvest 42.9 sacks per hectare (37.3 bu/ac) to cover his costs at current soybean prices.

For farmers that grow Roundup Ready soybeans, the cost would be R$ 54.41 per sack (approximately $7.72 per bushel) and a farmer would need to harvest 41.9 sacks per hectare (36.5 bu/ac) to cover his costs at current soybean prices.

For farmers that grow Intacta soybeans, the cost would be R$ 57.72 per sack (approximately $8.19 per bushel) and a farmer would need to harvest 44.4 sacks per hectare (38.6 bu/ac) to cover his costs at current soybean prices.