RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

SLC buys into slowing Brazil land market, as crop prices rise

Twitter Linkedin eCard

Brazilian farm operator SLC Agricola unveiled its first large farm acquisition in more than two years, buying into the country's slowing land market.

LandCo, a subsidiary of SLC, paid R$77.99m ($19.64m) for 13,288 hectares of farmland in Mato Grosso, Brazil's top corn and soybean producing state, taking the group's portfolio to nearly 321,000 hectares - an area about the size of the US state of Maryland, of the UK county of Gloucestershire.

The deal is equivalent to some R$5,870 a hectare, well below the average of R$11,000 per hectare at which SLC's portfolio was valued by Deloitte Touche Tohmatsu in July, although most of the acquired land is set aside to meet legal requirements for reserves and only 5,445 hectares of arable land.

Brazil's government mandates areas of farms which must be set aside for environmental purposes.

'Growth strategy'

SLC said that the acquisition is "in line with its growth strategy", which includes development of its portfolio besides enhancing the profitability of its farming operations.

The group will from 2016-17 crops farm the site, which is adjacent to SLC's existing Perdizes farm.

SLC already claims some 370,000 hectares of crop plantings – including some on the group's substantial amount of land leased land from other owners, and with some areas counting twice, in being taking two crops over a season.

Mato Grosso is noted as the top state for growing second-crop, or safrinha, corn, which is planted early in the calendar year on land vacated by the soybean harvest.

Real decline

The deal comes at a time of slowing land prices, as signalled by the Deloitte Touche Tohmatsu survey, which showed SLC's portfolio appreciating by 7% year on year, below the rate of inflation, and the 19% increase in the previous 12 months.

However, profitability prospects for Brazilian cropping farmers have improved with the weakness of the real, which has shielded growers from the decline in international crop prices, denominated in dollars.

The Brazilian currency has been hit by concerns about the state of economy, a crisis in government overspending, and a political deadlock that is preventing austerity measure from being imposed.

This week the real hit a new all-time low against the dollar, forcing the Brazilian government central bank governor to step in with a pledge to support exchange rates with central bank currency reserves.

In the black

According to research institute Cepea, real-denominated soybean prices are up 36% on the same time last year, while corn prices are up 48%.

While the weaker real has boosted production costs too, the effect has not been enough to prevent farmers being offered the potential for decent profits, with Cepea estimating last month that Mato Grosso soybean growers selling at the port of Paranagua would receive a return of about 17%.

This week analyst Michael Cordonnier underlined to Agrimoney.com that "Brazilian farmers' butts have been saved by the currency.

"It's been manna for them."

By Agrimoney.com

Twitter Linkedin eCard
Related Stories

Evening markets: Soybean futures gain, cotton prices jump on US data

Initial USDA forecasts for crop supply and demand for 2018-19 lift soy and cotton prices, but are not so well received in the cotton market

Will protein prices fight back against fat in dairy markets?

Prices of fats remain elevated against protein values in dairy - at a time when the opposite is true in markets for oilseed products

Morning round-up, Friday February 23

French crop ratings... Russia bans imports of Belarus milk... clampdown on foreign purchases of French farmland...

Evening markets: Argentine moisture slips up soymeal rally. But weather revives wheat

Meal futures dip, a little, for the first time in 12 sessions. But wheat futures gain, as drought spreads in Kansas, and cold reaches Europe
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069