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March 16, 2020

Weak Currency Spurs Aggressive Selling by Brazilian Farmers

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

The Brazilian currency continues to weaken compared to the U.S. dollar opening the door for record high domestic grain prices in Brazil which has encouraged Brazilian farmers to aggressively sell both their 2019/20 crops as well as forward contracting their 2020/21 crops.

According to analysts from ARC Mercosul, Brazilian farmers have sold an estimated 70% of their 2019/20 soybean production and 10-15% of their 2020/21 production which they will not plant until later this year. For corn, Brazilian farmers are aggressively selling this year's crop and they have already forward contracted 5-10% of their 2020/21 corn production.

The Brazilian real closed last Friday at 4.81 reals per dollar resulting in soybean prices at some Brazilian ports as high as R$ 97.00 per sack (approximately $10.65 per bushel). These high prices at the ports translate to high prices in the interior as well.

According to the Mato Grosso Institute of Agricultural Economics (Imea), farmers in Mato Grosso had forward contracted 74% of their anticipated 2019/20 corn production by the end of February, which represented an advance of 9% during the month of February. The average corn price in Mato Grosso during February was R$ 27.72 per sack (approximately $3.05 per bushel), which was up 4.5% during the month of February. Farmers in Mato Grosso have also sold 15% of their anticipated 2020/21 corn production, which was up 13% for the month of February.