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Brazil farmers increase soybean sales as currency weakens
Jun. 15, 2017
Brazilian farmers have been slow sellers of their 2016/17 soybeans while they wait for better opportunities to sell their soybeans at a profit, reports Soybean and Corn Advisor. They are waiting for either a weakening of the Brazilian currency or adverse weather to develop in the United States resulting in higher soybean prices. It appears that their wait may be paying off, at least for now, because the Brazilian currency has weakened and hot and dry conditions have developed in the United States.
At one point on Tuesday, the Brazilian currency hit 3.33 to the dollar and it closed the day at 3.308 to the dollar. This is the weakest the currency has been for several weeks after spiking to 3.40 to the dollar when tape recordings were released of the Brazilian President discussing hush money for a politician accused in the "Car Wash" scandal.
The weakening of the Brazilian currency is probably due to the market losing confidence that the Brazilian Congress will pass austerity measures that they feel are necessary for Brazil to emerge from its worst recession in memory. The austerity measures would help to curb the deficit by reforming the pension system and eliminating some workers' rights.
The prices for commodities have also been increasing on the Chicago Board of Trade due to hot and dry conditions across the Midwest. The spring wheat crop has been impacted the most from the adverse conditions, but the newly planted corn and soybean crops are also being impacted. This is double good news for Brazilian farmers.
Soybean prices at the Port of Rio Grande in southern Brazil increased to R$ 71.00 per sack on Tuesday ($9.77 per bushel) for old crop soybeans and R$ 75.00 per sack ($10.33 per bushel) for new crop soybeans that will be available early next year. At the Port of Paranagua, new crop soybeans were also trading at R$ 75.00 per sack on Tuesday.
Brazilian farmers have been slow sellers of their 2016/17 soybean crop marketing only 58% of the crop by the end of May. By the end of May in 2016, they had sold 76% of their crop. Sales have picked up recently and they are expected to accelerate even more if commodity prices move higher or if the currency continues to weaken.
The first U.S. soybean crop rating of the season was released Monday afternoon and the soybeans were rated 66% good to excellent compared to 74% good to excellent for the first rating in 2016.
Source: Soybeans&Corn Advisor
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