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Blog by Joana Colussi and Gary Schnitkey, Department of Agricultural and Consumer Economics, University of Illinois

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Soybeans prices are selling at highs in Brazil because of strong internal and external demand, rising prices on the Chicago Mercantile Exchange, and a weak Brazilian real couple with a strengthening U.S. dollar. Prices have risen at the same time that Brazil, the world's largest soybean producer, has achieved a new record harvest. The 2020/2021 forecast indicates Brazil will harvest 4.97 billion bushels, 8.5% more soybeans than last season. In addition, Brazil´s soybean exports increased dramatically in the last months, reaching historic highs, including unusual sales to the United States.

High Prices in Brazilian Market
The average monthly cash price received by farmers for soybeans in Paraná, the second-largest soybean-producing state in Brazil, increased 66.8% from June 2020 to May 2021, according to data from the Center for Advanced Studies in Applied Economics of "Luiz de Queiroz" College of Agriculture at the University of São Paulo (see Figure 1).

A 60-kilogram bag of soybeans (2.2 bushels) was sold for BRL 177.48 (USD 33.51) on May 12, a nominal record since September 2012. In the port of Paranaguá (in Paraná), a 60-kilogram bag was sold for BRL 183.02 (USD 33.49) on April 27, also a nominal record in the past 9 years. These historical prices occurred as Brazil's soybean harvest was ending up, which reached a new record in average yields: 3.517 kilograms per hectare. Before that, the best result was in the 2017/2018 crop, with 3.507 kilograms per hectare.

The historically high soybean prices in Brazil this year is correlated with highs in soybean prices on the Chicago Mercantile Exchange (CME). Soybean futures traded in Chicago were the most expensive since June 2013, surpassing $15 per bushel in U.S dollars. Among the factors for the increase are low stocks of soybeans in the United States, rain in Argentina that hampered the harvest and the soybean acreage surprise for USDA Prospective Plantings Reports (see farmdoc daily April 7, 2021).

Tightened U.S. Soybean Supplies
A surge to eight-year highs in Chicago soybean prices is also boosting American farmers' incomes, after many years of narrow margins. In 12 months, the average monthly cash price received by farmers for soybeans in Central Illinois increased 78%, jumping from $8.40 per bushel in May 2020 to $14.94 per bushel in April 2021 (see Figure 2).

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