Currency Depreciation Helps Brazilian Farmers Hit Record Profits
URBANA, IL – Brazilian farmers are on a trajectory to have the highest soybean return in history for the 2019/20 marketing year. According to Dr. Gary Schnitkey, an agricultural economist at the University of Illinois, the increase in soybean price in Brazil is directly related to the depreciation of the Brazilian real (BRL) relative to the U.S. dollar (USD). With decreased domestic supplies and the depreciation of the currency, exchange rate movements have reduced the price of Brazilian products sold in foreign markets, thus making Brazil’s soybeans more competitive relative to U.S. soybeans. From January through September, the dollar rose 29 percent relative to the real. Though the Brazilian economy slowed during the 2020 COVID-19 pandemic, it led to a further depreciation of the real, thus leading to greater profitability for Brazilian soybean growers.
(SOURCE: https://farmdocdaily.illinois.edu/2020/09/brazilian-soybean-profits-to-reach-historical-highest-in-2020-21.html)