South America Calling
Alastair Stewart South America Correspondent

Wednesday 09/12/12

Brazil's Forward Sales Streets Ahead

Brazil soybean farmers keep on getting further and further ahead with the sales of the 2012-13 crop.

The recent surge in international prices has prompted southern farmers to forward sell another batch of next-crop beans over the last week. As a result, farmers have now committed coming up for 50% of the crop, which is completely unheard of.

According to Celeres, a local farm consultancy, some 45% of the 2012-13 crop had been committed for sale as of Sep. 9, compared with 36% at the same time last year and a five-year average of 16%.

Normally farmers would respond to U.S. weather related run-ups in price by selling old-crop beans. But with so few of those in the silos (Celeres estimates 98% has been sold), the option has been to sell next year's crop.

Talking to farmers, there is a frustration at having sold so heavily earlier in the year, thus failing to take full advantage of mid-year price peaks for another year. But the sales have ensured locked in profits for farmers, assuming crops come through.

According to AgRural, another local consultancy, soybean farmers in southern Goias can expect a margin of R$1,400 per hectare ($279 per acre), up from R$1,300 per ha (259 per acre) last year (Figures don't include land rents).

"Profits could have been much higher, if farmers had waited but historically these returns are still fantastic," said Danielle Siqueira, grains analyst at AgRural.

Posted at 12:55PM CDT 09/12/12 by Alastair Stewart
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