Brazil’s forward soy sales lag on weak prices: Franca Junior

Forward sales of Brazil’s 2017/18 soybean crop reached 31% of the expected total by the end of last week, 34% lower year-on-year due to low global commodity prices, agribusiness consultants Franca Junior said on Wednesday.

Forward sales of soybeans at this time of year average 40% and that producers have sufficient cash in hand and access to credit to delay sales, said founder Flavio Franca Jr.

“Farmers are focusing on harvest rather than selling because they have a healthy reserve of cash and prices are relatively weak,” he said.

The planting of the current crop, which is now in the early weeks of harvest, was held back by irregular rains early in the September-December planting season, delaying development in many of the earlier harvesting regions, including top producer Mato Grosso.

Franca Jr said a decline in input prices for fertilizer and chemicals from a year ago also has helped farmers sell less of the current crop to secure supplies for the next season.

The Mato Grosso state Farm Economics Institute (Imea) reported earlier this week that sales of the soybean crop reached 50% of the state’s expected output, trailing last year by 7.7 percentage points.

Harvest in Mato Grosso reached 11.5% of the estimated crop by 20 January, down 8.2 percentage points from a year ago, Imea said.

Imea said the price of a 60 kg bag of soybeans in Rondonopolis, the main logistical hub for grain exports in the south-central region of the landlocked centre-west state, was quoted at BRL 61.30/bag ($8.76/bu), down 1.6% from a month ago.

Meanwhile, the price of the same bag fell 1.9% to BRL 71.85 at the southern port of Paranagua over the same period. Meanwhile, freight costs are down 5.6% from a month ago on the Rondonopolis-Paranagua route for soybeans, Imea said.

Franca Jr said Brazil overall has harvested less than 2% of its expected 112.6 million mt crop, which is projected to finish slightly down from the 114.2 million mt harvest last season when near-perfect rains helped propel output into record territory.

Franca Jr cited a dry spell in the third largest soybean producing state of Rio Grande do Sul in previous weeks and overly wet weather in the number-two producer Parana as likely reasons for this season’s harvest falling short of last season.