South America Calling

Brazil's soybean market has been busy over the last couple of weeks in response to a surge in prices.

Slow up until August, new-crop sales have exploded over the last 30 days following a surge in futures on U.S. crop concerns and the slide of the Brazilian real against the dollar.

As a result, approximately 35% of the crop has been sold, up from around 20% at the start of August and only slightly behind last year's marketing percentage, which at the time was considered exceptional.

Soybeans are currently quoted at R$74.00 per 60-kilogram bag ($14.10 per bushel at Paranagua port, up 13% on the month. In Sorriso, Mato Grosso, the price has risen 19% to R$60.50 per bag ($11.55 per bushel).

"Prices have jumped just at the right time. The outlook now isn't too bad for next year," said Sergio Triches, who farms 9,400 acres in Sorriso, Mato Grosso.

The jump in logistics costs is hurting Brazilian farmers, but they have been favored by a decline in fertilizer prices.

International fertilizer prices have fallen 20% to 25% since August 2012, according to Rabobank.

Even with the Brazilian real losing 15% against the dollar, that still results in cheaper fertilizer prices.

In Sorriso, Brazil's biggest soy-producing district, the price of a metric ton of potassium chlorate fell from R$1,406.94 to R$1,319.03, according to Sao Paulo University's CEPEA farm research unit.

Monoammonium phosphate (MAP) also dropped, 3%, although urea rose 5%.

Still, increased potassium and phosphate use and rising freight cost means overall fertilizer costs will still rise in Mato Grosso, by 25% on the year to R$646.92 per hectare ($120.05 per acre) for 2013-14, according to the Mato Grosso Farm Economy Institute (IMEA).

As a result, the rate of exchange between fertilizers and soybeans has risen compared with last year but remains favorable in historic terms.

In Sorriso, it costs 27.6 bags of soy to buy a ton of potassium chlorate, up from 21.6 bags a year ago, according to CEPEA.

This rather abstract number is significant because many farmers buy inputs in exchange for future crop as a way of reducing cashflow needs.

Brazilian soybean output is expected to rise 5% to 8% next season to reach 85 to 88 million metric tons.

(AG)

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