Forward sales of soy, corn pick up in Mato Grosso

Forward sales of soybeans and corn in Brazil's central-western state of Mato Grosso picked up in January as higher prices led farmers to hedge their expected output.

By the end of last month, 68pc of the 2019-20 soybean production in Mato Grosso had been sold in advance, a record level for this time of the year over the last five seasons, the local Institute of Agricultural Economics (Imea) said.

The pace is far ahead of the five-year average of 54pc as well as last season's percentage for this period of 54pc. Soybean prices in Mato Grosso have been attractive for farmers to hedge their harvest, with the Imea index reaching R$71 ($16.5) per 60kg bag at the end of January, or 17pc higher than a year earlier.

Corn presents a similar scenario. Forward sales of corn reached 64.5pc of the expected season's output in January, from 57pc in December, 46.5pc last year and 44pc over the five-year average, according to Imea.

Due to record exports last year and uncertainties regarding the second corn crop, known as safrinha, this year, corn prices have been high in Brazil, with a bag in Mato Grosso reaching R$37 by the end of January, a 78pc jump from a year earlier.

Estimates

Imea last week raised its estimates for Mato Grosso's soybean and corn production in 2019-20. The oilseed is currently being harvested, while corn is being planted.

Soybean output is expected to reach a record of 34mn t, up from 33mn t in the October estimate and compared to output of 32.5mn t last season. The corn forecast is for 32.4mn t this year versus 31.6mn t in the prior estimate and output of 32.3mn in 2018-19.

By José Roberto Gomes