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Corn Profit: Secret is in the Dollar

Posted by Marina

“The secret is in the dollar, it is important to follow its performance. Expert Daniel Tatsumi, currency manager at ACE Capital, said 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 for the short term, citing that, for example, against the Mexican peso, the Brazilian currency has been at a minimum for several years ”, points out T&F Consultoria Agroecômica.

According to the expert, the trend is that the US currency is going down against the Brazilian currency within a short 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 be appreciated again, driven by the improvement of the Brazilian economy”.

"You only need to monitor whether this degree of improvement will be greater or less than the world improvement, which, in this case, would strengthen the US dollar and keep the Brazilian currency price depreciated", concludes T&F Consultoria Agroecômica. Accompanying:

Positive factors

* Lower final inventory forecast
* Problems in the American crop 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 for both corn grain and meat
* Helping dollar, although not at its peak
* In Mato Grosso and Goiás, exporters needing to cover position

Negative factors

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

Source: Agrolink