October 8, 2008
Brazil's Mato Grosso soy at break-even or worse
Profit margins for soy farmers in Brazil's main producer state, Mato Grosso, have shrunk to nothing or into negative territory as Chicago Board of Trade soy futures dive below US$10 a bushel, according to a local agronomist.
"The panorama today for soy in Mato Grosso is not good, with maybe some regions in the south of the state at break-even," said Eduardo Godoi, an agronomist at AgRural in Mato Grosso.
Soy futures for the November contract on the CBOT were US$9.42 per bushel. The rising dollar against the Brazilian real, currently at BRL2.23, has not provided too much relief for farmers' operational costs, Godoi said, because crop inputs were purchased months ago, when the dollar was below BRL1.70.
Godoi said production costs were around US$800 per hectare in the west and centre-north region, or in big soy towns like Sorriso and Lucas do Rio Verde.
Farmers there have around 7 percent of the 2008-09 soy crop seeded at this time, with 25 percent of the crop sold.
However, trade has largely stopped as a result of soy prices being no longer lucrative in Mato Grosso.
"My father told me that there is no hurry to do a bad deal and who is going to rush now and do a deal in this price climate," Godoi said.
Brazil is the No. 2 soy producer and exporter behind the US.