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Exchange rate merry-go-roundExchange rate merry-go-round

Brazilian producers keep one eye on weather, other on currency exchange rate.

James Thompson

September 29, 2016

1 Min Read

Can you make 47.2 bushel beans per acre farm-wide? If so, you’ve hit the Mato Grosso bean producer’s breakeven point.
Yes, a recent study says producers in Brazil’s number-one soy state need to clear $372.46 per acre before they get any of their soy investment back, according to an article in portaldbo.com.br.
And that could be one reason why just 27% of the state’s 2016-17 bean crop has been sold so far, with producers waiting on La Nina or the exchange rate to show positive signs for the coming crop.
Brazilian producers, like you, have to think about prices, weather, pests, weeds and disease. But they also have to keep an eye on the exchange rate, since soybeans, fuel and most chemicals they use are priced in reaction to the value of the U.S. dollar.
One expert pointed out that most of the state’s farmers bought their inputs back when the exchange rate was 3.66 Brazilian reals to each dollar, but lately the exchange rate has dropped to something closer to 3.2 reals to the dollar.
That’s causing some worries in South America. That, and dry weather in states like Goias and Mato Grosso, where as many as eight counties have declared weather emergencies due to the lack of planting season rains.

The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.

About the Author(s)

James Thompson


James Thompson grew up on farms in Illinois and Tennessee and got his start in Ag communications when he won honorable mention in a 4-H speech contest. He graduated from University of Illinois and moved to Tocantins, Brazil and began farming. Over his career he has written several articles on South American agriculture for a number of publications around the world. He also edits www.cropspotters.com, a site focusing on Brazilian agriculture.

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