South American Currencies Push to Historic Lows
- The Brazilian real fell to an all-time low vs the USD at 5.75:1
- The Argentine peso also made a new low at 66.42 to the Dollar.
- Brazilian producers have forward contracted a record 80% of their 2019/20 soybean production compared to an average of about 60%.
- They have already forward contracted 35% of their anticipated 2020/21 soybean production; also a record for this early in the season.
- Brazil exported a record 13.5 million tonnes of soybeans during March.
- Brazil might set a new record of 14.5 million tonnes of soybean exports in April and could export at least 10 million tonnes in May.
FBN’s Take On What It Means: Brazilian growers are seeing record prices and profit margins for the 2021 soy harvest, and have been very active sellers. The weakness in the Real should incentivize Brazil’s farmers to expand planting intentions for 2021 soy and grain production. In past years, when prices were high, producers increased their soybean acreage by as much as 8% to 10% annually. However, because the price increase is due to a weak currency and not higher world prices, the potential area increase may not be as large as the cost of inputs priced in Dollars rises dramatically. Weak currencies are expected to continue to increase competition from South America and will likely weigh on world prices
Russian Wheat Export Quota Met
- Russia will suspend grain exports until July 1 only after the grain it has declared in its second-quarter quota has been shipped.
- Exports of wheat, rye, barley and corn will continue to countries which are members of the (Russia-led) Eurasian Economic Union.
- The quota ran out quickly this weekend as traders rushed to secure customs documents for shipments in May and June.
- Russian Union of Grain Exporters, released a statement that there is no risk to Russian exporters being able to fulfil their contracts to Egypt.
FBN’s Take On What It Means: Looking at how quickly the quota was subscribed, these were likely not actual export orders but a result of exporters getting the necessary paperwork in place to make sure they have a place in this quota. In reality, Russia's April grain exports are seen at around 4 million tonnes, leaving almost 3 million tonnes for exports in May and June even though the quota has technically been met. This probably doesn’t leave an export window open for US origin wheat.
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