Apr 18, 2018
Brazil Soybean Farmers Benefit from potential Trade Dispute
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The Brazilian soybean crop was 85% harvested as of late last week compared to 87% last year and 84% for the 5-year average according to AgRural. This represented an advance of 8% for the week. The big advance came in the state of Rio do Sul where the soybean harvest advanced 25% last week to 50% complete. In northeastern Brazil, the harvest has been slowed by wet weather, but farmers are managing to harvest between showers.
Domestic soybean prices improve in Brazil - Domestic soybean prices in Brazil registered strong gains last week. In southern Mato Grosso and northern Mato Grosso do Sul, soybean prices ended last week in the range of R$ 72 to R$ 75 per sack (approximately $9.91 to 10.33 per bushel). Prices ended even stronger in the state of Parana finishing the week in the range of R$ 85 to R$ 86 per sack (approximately $11.70 to $11.84 per bushel).
The higher prices are due to a number of factors including: a potential trade conflict between the United States and China, higher premiums at the ports, and a weaker Brazilian currency which closed last week at 3.42 to the dollar, and potential weather concerns with spring planting in the United States. All of these concerns have encouraged farmers to increase their soybean sales. Up until this point, farmer selling had been slow, but it picked up last week. It is estimated that Brazilian farmers have now sold 52% of their 2017/18 soybean production compared to a 5-year average of 55%.
Brazilians are generally skeptical if an actual trade war will break out between the United States and China. Many Brazilian think this is just "bluster" on the part of President Trump. For the time being, it doesn't matter if it ends up in a "hot trade war" or not, they are happy to take advantage of some of the strongest soybean prices they have seen over the last few years.