May 30, 2017

Agricultural Markets are concerned about the Brazilian Currency

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

As far as the agricultural markets are concerned, it's the value of the Brazilian currency that is of utmost importance. If the currency devalues, that would encourage Brazilian farmers to sell some of their remaining soybeans, which in turn could impact U.S. soybean exports. If the currency remains relatively stable, then Brazilian farmers would probably continue to hold onto their soybeans, at least for a while, waiting for a weather concern to develop in the United States.

Thus far, the currency in Brazil has remained rather stable due to two factors. First of all, the Brazilian Central Bank continues to intervene in the market to maintain the value of the currency. Secondly, the politicians in Brasilia insist that they will pass the austerity measures regardless of who is the Brazilian President. Thus far, it seems like the money market believes these austerity measures will be passed. Stay tuned, things could change at any time