BrasilAgro underlined Brazilian farmers' reluctance to sell forward soybeans – a stand-off blamed by Archer Daniels Midland and Bunge for hurting profits – even as the group unveiled a sharp fall in sowings of the oilseed.
BrasilAgro said that it had sold forward 20,928 tonnes of soybeans for the 2016-17 harvest, crop for which is now being seeded, equivalent to 43% of expected production.
That is well below the rate of 64% that the group had sold forward a year ago ahead of the 2015-16 harvest.
And the slowdown tallies with ideas from other sources that Brazilian farmers are proving slow to hedge their crop, given a drop in prices as the weaker real has supercharged the impact of weaker values in Chicago, the world's benchmark market.
On Wednesday, Bunge blamed the stand-off by Brazilian farmers for hurting profits, which came in well below investor expectations.
"Normally, the Brazilian farmer sells a portion of their new crop in the third quarter, prior to planting, to lock in a portion of their margins," Drew Burke, the Bunge finance director told investors.
"That did not happen this year due to declining crop prices on a local-currency basis," he said, adding that "they will eventually come to market with their 2017 crops, but the timing is uncertain".
On Tuesday, Juan Luciano, chief executive at rival ag trading giant ADM, said that in Brazil "producer commercialisation of next year's soybean and corn crop decreased due to lower commodity prices and the continued strength of the real.
"The farmer in Brazil, that was 40% sold by this time last year, is only 20% sold now, so we have less volume going through our [trading] operations."
In fact, data from Imea, research institute in Mato Grosso, which pegs the 2016-17 soybean crop the top producing state at of 27.8% sold so far, down 20.0 points year on year.
After a rapid start - with 21.0% of the crop sold by June, more than six months before it will be harvested – hedging has slowed to a crawl.
For corn, of which Mato Grosso is in the main a producer of safrinha crop, harvested mid-calendar year, forward sales for 2016-17 are running, at 18.8%, down 46.1 points year on year, according to Imea.
BrasilAgro revealed its soybean hedging slowdown in a results statement which also revealed that the group was to cut sowings of the oilseed in 2016-17, to 22,340 hectares, from the 31,154 hectares seeded last season.
While total area was estimated at 71,745 hectares, up some 16,500 hectares, the group is focusing on increasing its pasture, to more than 20,500 hectares, to accommodate its growing beef operation.
The group unveiled a 93% slump to R$3.02m in earning for the July-to-September period, on revenues down 35% at R$40.2m, a decline reflecting the dent to last season's crops from drought.
"These results also reflected the impact of the severe drought on the Bahia and Piauí farms, reducing soybean and corn yields and lowering grain sales volume," said Andre Guillaumon, in his first results statement since being appointed BrasilAgro's chief executive.
By Mike Verdin