Brazil’s biggest farm coop grapples with surging grain inventories

Brazil’s largest farm cooperative entered 2024 with grain stocks over 50% higher than in 2023 driven by a bumper crop last season and sluggish farmer selling, Coamo’s President Airton Galinari said.

The situation reinforces that supply pressure could continue to weigh on grain prices and dampen farmer sentiment in Brazil, the world’s biggest soybean exporter and producer and a major corn exporter.

Coamo, based in Parana state, reported carryover stocks at 3.66 million metric tons, including soy, corn and wheat. The volume represents more than 36% of the total of nearly 10 million tons received by the cooperative last year.

On Friday, Chicago wheat futures touched a 2-1/2-month low while corn and soybeans consolidated near three-year lows, after official forecasts of higher U.S. grain stocks.

In addition to having full silos from the previous harvest, Coamo is dealing with advanced soybean deliveries from the 2024 crop, pressuring its own storage capacity, currently at 6 million tons.

Coamo received more than 30% of the total soybeans it had expected from the current crop, which is early, according to Galinari.

But the beans keep pouring in.

Farmers can deliver grains to the cooperative without finalizing a sale for up to a year. But because prices are low, farmers have only settled sales for less than 10% of their new soybeans while in previous years, done deals represented 30% to 40% of the new soy at this time, Galinari noted.

From a Brazilian farmers perspective, the situation may worsen before it gets better.

After a drought destroyed soy fields in competitor and neighbor Argentina, the country will reap twice as much beans as in the last season, replenishing world stocks.

In the meantime in Brazil, farmers may be forced to sell grains to pay up bills due in April and May, generating even more downward price pressure, Coamo’s executive said.
Source: Reuters (Reporting by Roberto Samora, Writing by Ana Mano, Editing by Marguerita Choy)