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January 14, 2019

Attitude of Brazilian Farmers Slipping

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

The attitude of the Brazilian farmers has slumped over the past month. There has been a lot of less than encouraging news lately. The weather is problematic, soybean yield estimates are declining, soybean prices have fallen, the currency is getting stronger, and the freight rate issue is unresolved. During the month of January, the average soybean price at the Brazilian ports declined 4% and the average soybean price in the interior declined 3%.

Last Wednesday, the average price at the ports was R$ 76.72 per sack (approximately $9.17 per bushel using an exchange rate of 3.8 reals per dollar). The average price in the interior was R$ 71.93 per sack (approximately $8.60 per bushel using the same exchange rate).

Brazilian farmers purchased their inputs when the real was weaker and now they are going to sell their soybeans when the real is stronger, which is just the opposite of what they would like to see. When they were purchasing their inputs, the real was trading in the range of 4.0 to the dollar. Now that they are getting ready to sell their soybeans, it is trading in the range of 3.7 to the dollar. As a result, some of the Brazilian farmers with low yields will lose money on their 2018/19 soybean production.

In the areas hit hardest by the adverse weather, farmers are now pinning their hopes on their safrinha corn production, but it remains to be seen if the weather will cooperate during the safrinha growing season. The most important time for the safrinha corn will be from mid-March to mid-May when the crop will be pollinating and setting grain.