Sep 22, 2009
Lower Prices, Stronger Currency, Not Good News For Brazilians
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Recent soybean price action has not been favorable for soybean farmers in Brazil. In Brazil, the May futures is the bench mark for soybean prices and the May 2010 CBOT soybean price has dipped below US$ 10.00 in recent weeks. Combine a weaker price with a stronger Brazilian real and it is not a good combination for Brazilian farmers as they plan for their 2009-10 growing season. The Brazilian government has announced that they will provide more funds for production loans, but production loans can’t substitute for a higher price.
Generally, Brazilian farmers need a soybean price between US 11-12 to insure a profitable soybean crop. That number would be lower in southern Brazil where inputs are cheaper and transportation costs are lower. That number would be higher in central Mato Grosso where inputs are more expensive and transportation costs are much higher. We’ll see what prices do later in the summer, but right now Brazilian farmers are not very excited about what they see as far as prices are concerned.