High prices boost soybean sales in Mato Grosso: sources

New Delhi — High soybean prices in Mato Grosso – Brazil's largest oilseed supplying state – have boosted farmer sales of beans in the 2019-20 marketing year (February 2020 - January 2021), market sources told S&P Global Platts Aug. 13.

For the past few weeks, backed by a weak Brazilian real and tight supply, average soybean prices in Mato Grosso are hovering around $9/bu, a seven-month high level, which has encouraged the state's farmers to sell their stocks.

As of Aug. 7, farmers have sold 97% of the 2019-20 soy crop, up 10 percentage points year on year, and they have forward contracted 51% of the expected stocks in 2020-21, up 26 percentage points on the year, according to Mato Grosso Institute of Agricultural Economics data.

The fast pace of Mato Grosso soybean sales should lend more support to overall Brazilian oilseed prices in coming weeks, market sources said. The state accounted for 34% of total Brazilian exports in the first half of 2020.

Mato Grosso has exported over 20 million mt of soybeans between January and July, up 16% on the year, with over 50% of the bean shipments destined for China, IMEA said Aug. 10.

A weak Brazilian real, which has lost over 40% of its worth on the year against the US dollar as of Aug. 13, valued at 5.38 real/$1, has also attracted Chinese soybean buying interest, a Chinese trader said.

Additionally, China – the world's largest soybean importer – has ramped up soy purchases, anticipating future uncertainties amid the coronavirus pandemic and growing US-China tensions, a market source said.

According to the market participants, soybean prices and sales in Mato Grosso are expected to remain high in August on the weak real, high domestic demand and dwindling stocks.