South American crop consultant Dr. Michael Cordonnier says the combination of a reduced South American soybean crop, lower soybean acreage in the U.S. and continued strong demand from China have combined to result in all-time record high prices for soybeans out of Parana.
At the Port of Paranagua, Dr. Cordonnier says soybeans have recently been bid at R$ 60 (real) per sack of 60 kilograms and they haven't been below R$ 50 per sack for the last two months. "These prices are even higher than during the last commodity peak in 2008," he says.
"The weakening Brazilian currency has also been a major factor contributing to the record high prices. As recently as last fall, the Brazilian currency -- the real -- was trading at 1.53: 1 compared to the U.S. dollar. The Brazilian real is currently trading at 1.88: 1 compared to the dollar. Since soybeans are priced in dollars, but paid in the local currency, the weaker the Brazilian real, the more Brazilian farmers are paid for every sack of soybeans they sell," says Dr. Cordonnier.
Dr. Cordonnier says record soybean prices will encourage acreage expansion for 2012-13. "Brazilian farmers are expected to increase their soybean acreage a minimum of 3-5% or more and if the weather cooperates during the growing season, the 2012-13 Brazilian soybean production could hit 78 million metric tons or more. At the same time, Brazilian farmers are expected to reduce their full-season corn acreage in order to plant additional soybeans," he says.
Juli says: And producers in Mato Grosso are thought to have around half of the expected 2012-13 crop already forward contracted -- a strong sign of acreage expansion.