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May 10, 2021

2021/22 Soy Forward Contracting in Brazil Slower than Last Year

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

Last week, the consulting firm Safras & Mercado estimated the Brazilian farmers have forward contracted 16.7% of their anticipated 2021/22 soybean production compared to 32% last year and 20% average for this period.

Brazilian farmers are more cautious this year with their forward contracting because they missed out on additional revenue last growing season by forward contracting too much of their crop too early.

The soybean price for much of their forward contracts last year was in the range of R$ 75 to R$ 85 per sack (approximately $6.20 to $7.05 per bushel), which was a good price at the time and they were happy to lock in the price. As we now know, the prices of soybeans have surged over the last six month and domestic prices in Brazil are now in the range of R$ 150 to R$ 160 per sack (approximately $12.40 to $13.20 per bushel).

The sentiment among Brazilian farmers is to be slow sellers of their reaming 2020/21 soybeans in hope of even better prices should there be problematic weather during the U.S. growing season. Safras & Mercado estimated that Brazilian farmers have sold 71.4% of their 2020/21 soybean production as of May 7th compared to 85.2% last year and 64% average.

Many times in the past, soybean prices have risen in June and July if there is adverse weather in the U.S. Farmers in Brazil purchase much of their inputs in June and July for the soybean crop they will start planting in September and October.