Insight Focus
Producer costs are rising for Brazil’s 2025/26 soybean crop. Costs in Mato Grosso are expected to rise by nearly 8% for the harvest, estimated at over 176 million tonnes, squeezing producers’ profit margins, mainly due to higher fertiliser and input prices. For the 2026/27 cycle, costs are projected to ease, supported by lower fertiliser market volatility and the possibility of interest rate cuts in Brazil.
As the soybean harvest progresses and Brazil prepares to ship another record crop, estimated at 176.12 million tonnes, farmers are scrutinising the current production figures — with a special focus on crop yields and costs.
Source: Conab
The Mato Grosso Institute of Agricultural Economics (IMEA) has just revised its expected crop yield for the 2025/26 harvest in Mato Grosso, the country’s main grain-producing state. The new estimate points to a result of 64.73 bags/hectare (ha), 7% above the previous projection released in December.
If the new forecast is confirmed, it could help improve the national average, since Mato Grosso accounts for almost a third of the country’s total production. Consulting firms such as Agroconsult also point to better crop yields in Mato Grosso do Sul and Rio Grande do Sul.
For now, Conab projects a yield of 3.61 tonnes/ha, similar to the 2024/25 season, which benefited from very favourable weather conditions.
Source: Conab
Rising Input Costs Push Up Fertiliser and Pesticide Prices
On the cost side, rising input prices have weighed heavily on producers’ pockets. On average, fertiliser prices increased by 11.8%, according to Comex — tensions in the Middle East, including production stoppages in Iran and Egypt, contributed to this situation.
Source: Comex
In the case of potassium-based fertilisers, widely used in soybean crops alongside phosphate fertilisers for their role in aiding pod formation and increasing grain weight, the increases were even more significant. Between 2024 and 2025, producers had to spend about 15% more to purchase potassium fertilisers, which are generally imported, according to Comex.
There were also increases in agricultural pesticide prices, pressured by a reduction in global supply — especially from major suppliers such as China — and by increased demand for new products. According to Imea, spending on fungicides, herbicides and insecticides rose by about 4.7% last year.
A series of other price adjustments — from production insurance to storage — meant that producers had to dig deeper into their pockets this season. Estimates from Imea indicate that total costs are set to reach about BRL 7,675.90/ha (USD 1,475.36) in Mato Grosso, an increase of almost 8% compared to 2024.
“The producer’s profit margin tends to be a little tighter, since the yield of the current harvest should not be very different from that achieved in the previous cycle and costs have increased,” says Mauricio Buffon, head of Aprosoja (Brazilian Association of Soybean Producers). “Stagnant soybean prices don’t help either.”
Maurício Buffon, head of Aprosoja. Photo courtesy of Anderson Araújo/Aprosoja.
Lower Costs Expected in 2026/27
For the next harvest, costs should return to lower levels. Initial projections suggest a price increase of around 5%, driven by expenses related to pesticides, financing, insurance and taxes. However, six months before the start of planting the next harvest, a lot can change — including for the better.
The Brazilian Central Bank began signalling in January that the interest rate could be reduced starting in March, if inflation remains within target and the macroeconomic environment continues to be favourable. As a result, some reduction in financing costs is expected. Currently, the benchmark interest rate stands at 15% per year, the highest level since July 2006.
Source: Brazil Central Bank
Fertilisers began to show price declines at the end of last year, and now there are signs of a less turbulent outlook.
Source: Comex
Despite recent volatility in urea prices, driven by strong demand from India in January and some supply constraints, greater price stability is expected. So far, there are no indications of movements that could disrupt production or significantly restrict exports from countries like China.
“In any case, it’s necessary to be alert to windows of opportunity and invest more and more in sharp financial management,” says Buffon.
