May 27, 2008

 

Brazil soy costs surge by 40 percent for 2008-09

 

Brazil soy growers will face a margin squeeze in the months ahead due to a 40-percent increase in overhead costs in the 2008-09 crop, the farm consultancy Celeres said Monday.

 

In Mato Grosso, Brazil's leading soy-producing state, costs are expected to rise by 41 percent to BRL1,584 (US$954.21) a hectare of transgenic soy, and BRL1,615 a hectare for traditional soy, which require more agrochemical sprays to kill weeds.

 

Celeres said that costs to produce transgenic soy, which makes up more than half of the Mato Grosso soy crop, are 47 percent fertilizer, 25 percent agrochemicals such as pesticides and herbicides, 9 percent fuel, 7 percent seeds, 3 percent labor, 2 percent transport, 2 percent warehousing fees and 5 percent miscellaneous.

 

In Parana, the second largest soy producer, overhead costs for transgenic soy per hectare are expected to rise to BRL1,398 from BRL1,050 for the 2007-08 crop. Conventional soy costs in Parana should hit an average of BRL1,421, up from around BRL1,100 in 2007-08.

 

Last season, Mato Grosso farmers averaged around 52 to 60 kilogramme bags of soy per hectare.

 

Average prices were around BRL30.00 a bag, for a total revenue per hectare of BRL1,568, based on productivity estimates made by the Agriculture Ministry.

 

Unless soy prices push higher, or yields were somehow a record breaker next year, Mato Grosso soy farmers would have a hard time making ends meet based on last year's yields and Celeres' new cost estimates made Monday.

 

Parana soy farms, on the other hand, averaged 50 bags a hectare. Parana soy prices are higher due to their proximity to the ports.

 

Soy prices averaged around BRL38 in 2007-08, giving Parana soy farmers average soy revenues of BRL1,900 a hectare.

 

This indicates that in the case of Parana, at least, if farmers there can produce another 50 bags a hectare and soy prices average BRL38 a bag, farmers of the more costly conventional soy will have profits of around BRL479 a hectare.

 

Soy prices in Parana Monday were over BRL40.00 a bag, according to Soma Corretora, a soy export broker.

 

Fertilizer costs are expected to account for 50 percent of the total overhead costs, compared to 38 percent of total costs in Mato Grosso for the 2007-08 crop.

 

Mato Grosso tends to be the most costly place to produce because of its distance to both the major southeastern commercial ports and its relative reliance on river transport in the Amazon region for non-southeastern port shipments.

 

Brazil's 2007-08 crop is 100 percent harvested at this time. Roughly 71 percent of the crop has been sold as of May 23, according to Celeres.

 

US$1 = BRL1.66 as of May 27, 2008