IMEA: Brazil soybean production costs to increase by nearly 60% in 2022/23
——The cost of soybean cultivation will reach 4619.56 reais per hectare
BEIJING, Jan 27 (Reuters) – Brazilian farmers are concerned about a sharp increase in soybean production costs in 2022/23, which will be the highest in more than 20 years. Costs will rise in all states, mostly driven by higher fertilizer prices. And there are reports that pesticides and seeds are also more expensive. Brazil’s soybean planting profits are expected to remain positive for the next year, but it is difficult to compare with the past two years.
Carlos Koger, director of agribusiness at Koger Consulting, said a stronger rise in soybean prices is needed to maintain profit margins similar to those seen in 2021 and 2022 in the next year. We have to consider the scenario of falling profit margins for soybean planting in Brazil. Soybean planting margins in the Cerrado reached 60% in 2020/21 and 43% in 2021/22, while soybean margins in 2022/23 could fall to nearly 100% in 2022/23 if currently forecasted production input prices remain unchanged. 30%.
According to data released this week by the Mato Grosso Institute of Agricultural Economics (IMEA), soybean production costs in the state of Mato Grosso are forecast at R$ 4,619.56 per hectare, up from the November 2021 estimate 1.14%. This was mainly due to a 3.13% increase in herbicide prices, a 2.02% increase in seed prices, and a 1.26% increase in macronutrient prices. If the cost in 2022/23 is compared with that in 2021/22, the year-on-year increase will be as high as 57.81%. The price of soybeans that farmers pre-sell for the next year rose 2.43 percent last month to an average of 151.64 reais per bag.
From another indicator, Mato Grosso’s fertilizer/soybean price ratio has also increased significantly. Fertilizer spending in 2022/23 is the equivalent of 11 bags of soybeans per hectare, compared to the historical average of 6 bags of soybeans; and crop protection at a rate of 7.5 to 8 bags of soybeans, compared to the historical average of 5 bags of soybeans. If you add the two together, the cost of soybeans (in reals) for the next year is already rising by nearly 45%. Therefore, either the real exchange rate appreciates, or the dollar quotation of soybean futures rises sharply to offset these losses. However, it should be pointed out that even so, Brazil’s soybean planting is still much more profitable than its US counterparts. In fact, Brazilian farmers have been profiting greatly from soybeans for the past 12 years. After calculating depreciation, Brazil’s soybean planting profits are still as high as $400 per hectare, while the US soybean planting profits are now less than $100. So the situation in Brazil is different from that in the US. Brazilian farmers will not reduce their acreage due to high input costs, because the conditions of Brazilian farmers are very favorable compared to their competitors. In addition, Brazilian farmers have the unique advantage of planting soybeans and planting another crop of corn, and global corn prices are as strong as soybeans.