The recent growing season resulted in a record amount of corn and soybeans in South America. Dr. Michael Cordonnier, agronomist with Soybean and Corn Advisor, Inc., says the problem is the prices have dropped 30-40 percent since January.
“The guys who did not forward contract some of their corn production are losing money because now they’re harvesting. You get harvest pressure on the prices, and they don’t have the storage space, so you either stack it outside or you sell off the combine, so prices are very depressed, and farmers are losing money if they did not forward-contract. And it’s like the eternal problem. Back in January when the prices were much better, they started to go down and farmers stopped selling while waiting for prices to get better. Well, they never got better.”
He says those lower prices are causing farmers to be more cautious heading into the next growing season.
“The soybean area is going to go up slightly, maybe one-two percent A very small increase. Now, the total production is going to go up maybe three, four, or five percent because everybody expects a much better crop out of Rio Grande do Sul with better weather. But acreage-wise, not much of an increase, one of the smallest increases in recent years. For corn, farmers will definitely plant less first-crop corn, switch more of that corn to soybeans, and then plant Safrina corn, and people are kind of down in the mouth about Safrina corn as well. So, Brazil corn acreage may hold steady, may even go down a little bit.”
The falling prices since the first of the year meant farmers were slow in selling their commodities. Dr. Cordonnier, “Last I saw, they sold maybe 63-64 percent of their soybeans, and normally you’d be up around 80 percent or so. So, they were very slow sellers because the prices were going down, and they were just holding and waiting for a better price. Now, in years past, if you held your crop in Brazil, it was kind of a good thing because there’ll be a weather concern in the United States. And then, with weather concerns here, we’d have a pop in the price, and then you’d have a better opportunity for selling. We didn’t get that pop in price as much as what they hoped for. And on top of it, for the corn especially, just this record volume and harvest pressure just push the prices lower, and they have not recuperated as of yet.”
A lot of Brazilian corn is coming onto the world market as well. He says, “Yeah, they’ll be exporting. The ports are working at maximum capacity. So yes, they’ll be exporting maybe 50 million tons of corn, maybe a little bit more. They’ll probably export more corn than the United States will this year, so they’re maximizing their port activity. Yeah, they’re going to export a lot of corn.”
For more information, go to soybeansandcorn.com.