ProfitabilityoftheBrazilian2016/17
soybeancropdropped,withsmaller
pricesfetchedbythekernel,andthenew
seasonislikelytokeepsimilarpatterns
MOREANDLESS
Still regardingprofitabilityevaluation, analyst LeonardoAmazonas, fromtheNational
FoodSupplyAgency (Conab), commented inhispaper “Perspectives for Agriculture”,
inSeptember 2017, that “despite the slightly lower variable costsof the2017 season,
compared to2016, prices fetchedby the farmers in2017areequally slightly lower
than in2016, onaverage”, considering the influence fromexcessiveoffer. Therefore,
heascertained that “theaverageprofitabilityof thevariable cost isdown45.88%”.
However, hemaintained that soybeancontinues as the cropwith thehighest returnand
liquidity,which is enough reason for the farmers toexpand their plantedareas again.
“
Unfortunately, in the 2016/17
growing season there was a drop
in profitability. Despite the bigger
total volume, with the Country hit-
ting a record high, the final average
result derived by the farmers was smaller,
because, while production costs rose from
5% to 15%, depending on the region, pric-
es fetched by soybean decreased consid-
erably”. This is the evaluation by professor
Argemiro Luís Brum, of the Northwest Re-
gional University of the State of Rio Grande
do Sul (Unijuí) and chief analyst at the In-
ternational Center for Economic Analysis
and Agronomic Market Studies (Ceema),
linked to the institution.
The researcher and market analyst re-
fers to examples in Rio Grande do Sul,
Paraná and Mato Grosso with reduction of
26.46% and 32.47% on average prices from
the crop in question and the previous one,
taking as reference themonthof June every
year. He comments that, “the soaring aver-
age productivity was not enough to avoid
the strong decrease inprofitability fromone
year to the next”. In the case of Rio Grande
do Sul, he cites calculations by the Agricul-
ture Federation of the State (Farsul) that the
average profit margin in Rio Grande do Sul
(gross income minus total cost) of soybean
Lessmoney in the
pocket
Economic result of the oilseed outstrips other grains
ing less on inputs), a fact that could jeopar-
dize the productive potential”.
Within this context, the professor re-
calls that, “the gains derived in the 2015/16
growing season, during the 2016 trading pe-
riod, were somewhat out of tune with real-
ity, stemming from artificially raised prices.
In 2017, they came back to reasonable lev-
els, a fact that is likely to have a repeat in
2018, except if the exchange rate skyrock-
ets, something unlikely for the time being”.
He adds that, “despite soybean’s econom-
ic drawbacks, the other three major crops
(corn, rice and wheat), experienced even a
worse behavior in the 2015/16 and 2016/17
crop years, if the average is taken into ac-
count”. Nonetheless, he makes it clear that
the advice “to avoid specializing in only one
crop” still holds”, with the existence of offi-
cial credit lines, at low interest rates, com-
pared to market interest rates practiced in
Brazil. Therefore, he understands that soy-
bean continues a viable crop in rice lands
and it will not come as a surprise if the crop
increases to the detriment of the cereal in
the 2017/18 growing season.
n
dropped 23% in 2017, compared to 2016.
For the 2017/18 growing season, ac-
cording to Brum, “considering productiv-
ity rates similar to the past season, income
to be achieved should remain within this
season’s patterns. This happens because
no price changes are expected, as the ex-
change rate and the Chicago Merchandise
Exchange are signaling prices similar to the
present levels”, he evaluated in September
2017.Nonetheless,heobserved,“weshould
take into consideration the fact that there is
much soybean stored from the past season
and this should press the market down-
ward should we have another abundant
crop early next year”. As for the costs go, in
his understanding, they might drop slight-
ly, “thanks to the exchange market and,
above all, becausemany farmers will prob-
ably try to establish cheaper fields (spend-
Inor Ag. Assmann
32
