<article><p class="lead">Brazilian farmers have started making forward sales of soybeans for the 2021-22 season much earlier than usual, an atypical development that reflects both attractive prices and robust barter rates for the top global producer.</p><p>Farmers usually negotiate part of their next crop before it gets planted to take advantage of market conditions and secure some future revenue. But forward sales have never occurred at such an anticipated pace. The 2021-22 soybean planting will only begin in September next year, after the 2020-21 season, for which sowing has not even kicked off.</p><p>At least 2pc of Brazil's 2021-22 estimated soybean harvest has already been traded, according to market sources, but the figure varies across the market. The South American country may produce around 140mn t in that cycle, according to some projections, compared with the 133.5mn t seen for 2020-21 and output of 124.5mn t in 2019-20.</p><p>The central-western state of Mato Grosso, Brazil's main producer of grains and oilseeds, takes the lead in terms of 2021-22 soybean sales. Up to 5pc of that<b></b>season's local production had been committed through August, brokers and analysts said. The state's Institute of Agriculture Economics (Imea) is expected to release a new update this month.</p><p>Future soybean prices have been attractive for Mato Grosso's farmers, oscillating from R96.50 ($18.20) to more than R100 per 60kg-bag for delivery between February-June 2022, depending on the region within the state. Currently, local spot prices are at R126/bag on average, according to Imea.</p><p>Other states have been reporting intense 2021-22 season negotiations as well. In Parana, Brazil's second-largest producer of the oilseed, bids reached R113.20/bag cif Paranagua last week for February 2022 delivery. In Rio Grande do Sul, forward sales reached 1pc of the expected local production, a broker said.</p><p>In Mato Grosso do Sul, 2021-22 soybean sales totaled nearly 70,000t last week alone, according to a broker. So far, 3pc of the state's potential harvest has been traded.</p><p>Prices above R100/bag across the country's main producing areas into 2022 are seen as an interesting level for farmers committing their future harvest. The prospect of high soybean values comes amid the likelihood of continued weakness of the Brazilian real against the US dollar - the commodity has a strong correlation to the dollar given its exporting appeal.</p><p>The real has depreciated by more than 30pc in the past year. Currently, the currency exchange is at R5.30/$1, and Brazil's latest central bank survey suggests it will remain weak through the end of next year<b>.</b></p><p>A weaker real makes Brazil's soybeans more attractive for foreign buyers, stimulating greater appetite among major importers such as China. Market sources say all of the forward trade of the oilseed for the 2021-22 season so far is destined for China, the world's top soybean consumer.</p><p>Robust Chinese appetite could be observed so far this year as Brazilian soybean exports reached a 70mn t between January-July, a record for the period, with more than two-thirds of that heading to the Asian country.</p><h2>Attractive barter rates</h2><p class="lead">Inquires for 2021-22 fertilizer purchases have also begun. In some regions, such as Mato Grosso, those negotiations have already reached 35pc of that year's soybean crop demand for the fertilizer, one trader said.</p><p>Sales have been encouraged by favorable barter rates – the ratio of a grain's bag price compared to a metric ton of PK/NPKs used in the crop. The soybean barter rate is at the lowest level since the beginning of <i>Argus</i> record-keeping in 2014. It was at 12.54 bags/t in the Mato Grosso towns of Sorriso and Rondonopolis last week, nearly 9 bags/t lower over the prior year.</p><p>As a result, farmers have been taking advantage of buying fertilizers with few bags of soy and fixing costs for a key-input.</p><p>In the potash market, inquires for the 2021-22 soybean crop are more active than those for the 2020-21 winter corn crop as farmers see the opportunity of selling their crops with high premiums and acquiring fertilizer at prices that increase profitability. Phosphate prices have been rising and reached $351.5/t cfr Brazil on average last week, up from $323.5/t cfr Brazil at the end of June and virtually flat year over year. Phosphate is widely used in soybean planting.</p><p class="bylines">By José Roberto Gomes and Kauanna Navarro</p></article>
