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December 14, 2016

Soybean Forward Selling in Brazil Picks up in November, 34% Sold

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

Brazilian farmers have been cautious in the forward selling of their soybeans, but the selling pace picked up a little during November. According to AgRural, the Brazilian farmers have now sold 34% of their anticipated soybean production compared to 29% in October. Last year the sales pace was 44% and the five-year average is 40%. The pace picked up in November due to higher international prices and a weaker Brazilian currency.

In the center-west region of Brazil, farmers have sold 44% of their soybeans compared to 38% in October. In southern Brazil, the sales are slower with only 19% of the soybeans sold.

In the state of Parana, farmers have sold only 15% of their soybeans compared to 35% last year at this time. Farmers have been cautions sellers because soybeans in Parana are now selling at R$ 77.00 per sack (approximately $10.30 per bushel) compared to two months ago when soybeans were selling for R$ 85.00 per sack or approximately $11.40 per bushel.

Brazilian farmers have forward contracted very little of their anticipated corn production and the price prospects going forward do not look good. Domestic corn prices in Brazil have been declining for several months and they are expected to continue moving lower until they reach the export price. Conab stated in their December Crop Report that they expect the corn price in northern Mato Grosso to fall to R$ 15.00 to R$ 17.00 per sack or $2.00 to $2.30 per bushel by June, which would be equivalent to the export price.

If these price forecast turn out to be accurate, Brazilian farmers could still increase their safrinha corn acreage, but they may end up cutting back on inputs to save costs, and that in turn, could impact the potential safrinha corn yields.