UPDATE 2-ADM says Brazil soy profit margin to fall sharply in 2015/16

lunes 3 de agosto de 2015 18:41 GYT

(Adds 2015/16 soy estimate, byline, quotes from Brazil's soy producers' association)

By Gustavo Bonato

SAO PAULO Aug 3 (Reuters) - Archer Daniels Midland Co expects average profit margins in Brazil's 2015/16 soy production to fall 77 percent from the previous season after two years of falling soybean prices, the company's South America president said on Monday.

Valmor Schaffer projected profit margins of 122.20 reais ($35.42) per hectare, down from 539.03 reais in 2014/15, and said average margins would only remain positive because of a weakening Brazilian currency.

"This harvest (2015/16), we still have (positive) margins... but not everyone sold soy with the dollar at 3.4 reais," Schaffer said at a conference sponsored by Brazil's Agrobusiness Association (Abag) in Sao Paulo.

Brazil's currency is 35 percent weaker than it was a year ago and is trading around its lowest in 12 years just as farmers are making final decisions for planting the upcoming 2015/16 crop that will be planted starting in September.

A weaker local currency means farmers bring home more reais for each dollar earned for exporting a bag of soybeans, even as the price of the underlying commodity weakens in dollars.

But it also means they can pay more for dollar-denominated imports like fertilizers and insecticides, which become more expensive in local currency terms.

It particularly hurts farmers who rely on a bartering system in which they buy fertilizers and other inputs in exchange for promising to deliver a portion of the upcoming crop.   Continuación...