- DTN Headline News
Brazil Soy Prices Slide
Monday, August 25, 2014 7:04AM CDT

By Alastair Stewart
DTN South America Correspondent

SAO PAULO, Brazil (DTN) -- Brazilian farmers are fretting about the prospects of the upcoming soybean harvest with futures indicating the lowest prices in four years.

"After some good years, 2015 promises to be difficult," said Claudio Jose Escariote, head of the rural association in Sapezal, western Mato Grosso.

But the prospect of tight or non-existent margins won't be enough to stop the momentum of soybeans, the driver behind the impressive growth in Brazilian agriculture over the last decade.

Local analysts believe 2014-15 soybean area will actually grow, by around 4% to about 77 million acres.

"Soy is like a locomotive. It takes a while to stop moving forward," said Anderson Galvao of Celeres, a local grain consultancy.

That dynamic can be seen most clearly in Brazil's frontier regions. Buoyed by healthy soybean prices since 2011, farmers have converted large swathes of pasture to soybean production in eastern Mato Grosso, Piaui, Tocantins, Maranhao and most recently Para. Conversion takes two-to-three years and so area cleared in 2011 and 2012 will start coming on line this year.

That's a significant driver to the forecast three-million-acre-plus growth in area when planting starts next month.

But perhaps more important is the lack of alternatives to soy in established regions.

Carlos Escariote will maintain soybean-planted area at 8,000 acres on his farms this season because there are no other options and at least after the soy he can plant a second crop of corn or sunflower.

Farmers tell similar stories across the Cerrado land of Mato Gross, Goias and into Bahia.

In the south, they can plant summer corn but that promises even lower returns than soybeans in 2014-15 and cooperatives across Parana and Rio Grande do Sul report summer corn area being switched to soybeans.

"Low prices for the cereal (corn) on the Chicago Board of Trade and on the domestic market are prompting growers to transfer their areas from corn to soybeans," said Safras e Mercado, a local grain analytics firm, in a recent note.


For those renting land, soybean margins promise to be thin or even negative in Mato Grosso next year. But for those planting on their own land, there is at least some money to be made.

In Sorriso, the state's biggest grain district, planting soybeans offers a margin of R$465 per hectare ($83 per acre), ex-rental costs, according to local consultancy AgRural. That's half the rate registered in 2013-14 but still a profit of 24% over operating costs. And margins will be substantially larger in the south, where logistics are better.

Meanwhile, exchange markets offer farmers some solace.

Futures indicate the Brazilian real will fall by 6% between now and March, which would bolster prices for beans. And with the country in the middle of a presidential election, the real could drop even lower at certain moments.


Further good news for the 2014-15 crop comes in the form of the return of El Nino weather phenomenon after a two year absence.

Generally, the phenomenon causes irregular spring showers, which may delay planting, but promotes good summer rains in the south and is seen as a net positive for crops.

As a result, analysts believe summer soybean yields will rise next season, pushing output to around 10% higher than the 86 million metric tons produced last year.

Alastair Stewart can be reached at alastair.stewart@dtn.com


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Katie Micik
Markets Editor
Monday, August 25, 2014 3:43PM CDT
Thursday, August 21, 2014 7:38PM CDT
Monday, August 18, 2014 7:29PM CDT
Technically Speaking
Darin Newsom
DTN Senior Analyst
Sunday, August 24, 2014 6:37PM CDT
Sunday, August 24, 2014 5:29PM CDT
Friday, August 22, 2014 8:20PM CDT
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Wednesday, August 27, 2014 1:46PM CDT
Monday, August 25, 2014 2:54PM CDT
Friday, August 22, 2014 12:54PM CDT
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Friday, August 22, 2014 7:23PM CDT
Friday, August 22, 2014 1:13AM CDT
Wednesday, August 20, 2014 2:40AM CDT
Minding Ag's Business
Marcia Taylor
DTN Executive Editor
Tuesday, August 26, 2014 6:26PM CDT
Friday, August 22, 2014 8:34PM CDT
Wednesday, August 13, 2014 8:23PM CDT
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Monday, August 25, 2014 4:46PM CDT
Monday, August 25, 2014 11:00AM CDT
Thursday, August 21, 2014 3:53PM CDT
DTN Production Blog
Pam Smith
Crops Technology Editor
Monday, August 25, 2014 4:07PM CDT
Friday, August 15, 2014 7:13PM CDT
Thursday, July 17, 2014 11:54AM CDT
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Friday, August 22, 2014 6:26PM CDT
Friday, August 15, 2014 7:42PM CDT
Friday, July 25, 2014 9:40PM CDT
South America Calling
Alastair Stewart
South America Correspondent
Thursday, August 21, 2014 5:43PM CDT
Wednesday, August 20, 2014 2:56PM CDT
Monday, August 18, 2014 7:33PM CDT
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Monday, August 25, 2014 10:12PM CDT
Monday, August 18, 2014 6:37PM CDT
Friday, August 15, 2014 7:44PM CDT
Machinery Chatter
Jim Patrico
Progressive Farmer Senior Editor
Tuesday, August 26, 2014 3:32PM CDT
Wednesday, August 20, 2014 3:16PM CDT
Thursday, August 14, 2014 8:43PM CDT
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Tuesday, August 26, 2014 10:18PM CDT
Monday, August 25, 2014 10:30PM CDT
Friday, August 22, 2014 10:17PM CDT
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Thursday, August 14, 2014 11:16AM CDT
Friday, July 25, 2014 6:07PM CDT
Friday, July 18, 2014 6:08PM CDT
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN