Brazil's farmers face higher crop costs too

Brazil's farmers face higher crop costs too

Stronger greenback makes input costs skyrocket

After a strong U.S. dollar and lingering late-season rains made for a big 2014-15 crop, while cushioning the months-long slide in Chicago bean prices, Brazilian farmers blinked awake to see the after-effects of the party.

Next to the overturned keg, there's a stack of estimates covering 2015-16 cropping costs—and just about all those expenditures promise to be higher than last year.

Buying less?
As a result, Brazilian fertilizer, seed and chemical purchases for 2015-16 were down 60 to 80% versus mid-June of last year, according to local farm media. Fertilizer deliveries for the first five months of 2014 came to 10,276,020 tonnes, or about 32% of total 2014 calendar year deliveries.

Brazil's farmers face higher crop costs too

In the same five months of this year, Brazilian producers have taken delivery of just 9,044,199 tonnes—which would suggest total 2015 deliveries of just 28,631,122 tonnes. And that would be down about 11% from last year.

Does all this forecast fewer soybean acres for Brazil in this fall's plantings? Probably not. Though the rate of bean acre growth in Brazil might slow, few observers think the country will actually reduce its soy area in the coming season. But it could mean a lower use of inputs on Brazil's 2015-16 bean crop, no matter its eventual size.

Sell high, buy even higher
Brazilian farmers celebrate a stronger dollar when they are selling beans here. But there's much gnashing of teeth when that same strong greenback makes inputs cost so much more.

As a result, by mid-May the farm gate cost of glyphosate, in Brazil's top soybean state of Mato Grosso, had climbed more than 65% over mid-May of last year, says the Mato Grosso Agricultural Economics Institute. And the state's farmers buying Classic herbicide are paying 26% more than one year back—all in local currency.

So, if you're worried about covering your costs of production, take some comfort in knowing you're not alone. The folks further south are facing a similar hangover. Everyone's getting back to work, finding a way to cover those cropping costs.

The opinions of James Thompson are not necessarily those of Farm Futures or the Penton Farm Progress Group.

More from Farm Futures:
Weekly Fertilizer Review
Weekly Energy Review
Weekly Basis Review

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