Profit in corn: The secret is in the dollar

“The secret is in the dollar, it is important to monitor its performance. Specialist Daniel Tatsumi, currency manager at ACE Capital stated that, making adjustments, the current level of 5.40 Reais per Dollar is equivalent to the records close to 5.90 Reais seen in May. With this, he understands that the real is excessively depreciated in the short term, citing that, for example, against the Mexican peso, the Brazilian currency is at its lowest in several years”, points out T&F Consultoria Agroeconomic. 

According to the expert, the tendency is for the North American currency to fall against the Brazilian currency within a short period of time. The T&F team of analysts points out some of the reasons for this, the first being the (slow, but noticeable) improvement in the Brazilian economy. The second is that the Real is “excessively depreciated”, which means that the currency “tends to appreciate again, driven by the improvement in the Brazilian economy”. 

“You just need to monitor whether this degree of improvement will be greater or lesser than the global improvement, which, in this case, would once again strengthen the US dollar and keep the Brazilian currency depreciated”, concludes T&F Consultoria Agroeconomic. To follow:

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Positive factors

* Lower ending inventory forecast
* Problems in the American harvest with flooding (in Iowa alone there were losses of more than 7 million tons) raising the price of Chicago and increasing the prospect of Brazilian exports,
* Good export demand, both for corn grain and meat
* Dollar helping, although not at its peak
* In Mato Grosso and Goiás, exporters needing to cover their position

Negative factors

*Safrinha Harvest
*High prices inhibit domestic demand from small farmers
*Possibility of the dollar falling in the second half of 2020.

Source: agrolink

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