Weekly Winners & Losers
Let’s start in the Southern Hemisphere today where the Brazilian real has dropped more than 5% in one month’s time.
In fact, Friday’s low of 0.18709 is the lowest the BRL has been versus the US dollar since January of 2023.
As a result (even with a falling board), CBOT soybean prices paid to the Brazilian farmer have rallied to their highest levels of 2024.
In one-month’s time, July bean futures have lost ~70 cents but due to the real’s depreciation versus the dollar, prices paid to Brazilian producers have actually rallied nearly 30 cents.
That is a big dollar’s worth of difference all due to the currency relationship.
Why it matters:
Stronger prices encourage farmer movement.
Farmer movement = more export availability.
More export availability = cheaper export premiums.
Cheaper export premiums = tougher competition for US exports.
Currency fluctuations provide quiet headwinds or tailwinds for exports. This one is no different except big drops in the BRL can often break the bean market for the reasons listed above.
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