August 1, 2013

Weaker Currency Slows Soybean Price Slide in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The sharp drop in soybean prices at the Chicago Board of Trade is also being reflected in lower domestic prices in Brazil. Over the past week, prices in the principal soybean producing states in Brazil have fallen R$ 5 to 7 per sack of 60 kilograms or US$ 1.00 to 1.50 per bushel.

In Cascavel in western Parana, prices have fallen from R$ 66.00 per sack to R$ 59.00 per sack over the past week (US$ 13.60 per bushel to 12.20 per bushel). In Maringa in northern Parana they are also down to R$ 59.00 per sack. In Sorriso in central Mato Grosso prices have fallen to R$ 45.00 to R$ 49.00 per sack (US$ 9.30 to 10.00 per bushel).

Lower prices are also being paid at the principal ports in far southern Brazil as well. At Paranagua the soybean price is in the range of R$ 63.00 (US$ 13.00 per bushel), which is down from R$ 73.00 or R$ 74.00 per sack (US$ 15.00 to 15.25 per bushel). At the port of Rio Grande in far southern Brazil soybeans are going for R$ 67.70 (US$ 14.00 per bushel), which is down from R$ 74.00 last week (US$ 15.28 per bushel).

The price declines in Brazilian soybean prices could have been even worse were it not for the weakening of the Brazilian currency. In May of this year the Brazilian real was trading at 2:1 compared to the dollar, but it has weakened and is now trading at 2.28:1. Since soybeans are priced in dollars but paid in the local currency, a weaker Brazilian currency is the same thing as a price increase for Brazilian farmers. Most people feel the currency will continue to weaken and it is expected to be in the range of 2.4:1 next spring when Brazilian farmers are selling their 2013/14 production.