- Posted by Rafael Moro
“Brazilian farmers are likely to have the highest profit in history in the 2020/2021 soybean harvest, as soybean prices have reached nominal records in recent months. The high prices are a result of the low domestic supply and the depreciation of the Real against the Dollar ”. The projection is by researcher Joana Colussi and professor Gary Schnitkey in the article “Profit from Brazilian Soybean will reach a higher historical level in 2020/21”, published on the page of the Department of Agricultural and Consumer Economics at the University of Illinois (USA).
According to the authors, soy prices “are likely to remain high in Brazil, and soy exports may grow for the 2020/21 marketing year. Production growth in Brazil is likely to continue for the next ten years ”.
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They point out that the monthly price at the port of Paranaguá (Pr. Paraná) increased by 66.5% from January 1 to September 25 this year, according to data from the Center for Advanced Studies in Applied Economics (Cepea) of the Luiz de Faculdade de Agricultura Queiroz from the University of São Paulo: “The increase in the price of soy in Brazil is directly related to the depreciation of the Real against the Dollar. From January to September, the US currency rose 29%. During the pandemic, the Brazilian currency depreciated even more as its economy slowed. ”
In addition to exchange rate changes, the authors explain, there are high premiums in relation to the prices of the Chicago Mercantile Exchange (CME) in Brazilian ports. In September and October this year, port premiums were between $ 1.90 and $ 2.00 per bushel above CME prices. "These premium increases occurred in a year in which Brazil harvested a record soybean crop, surpassing 124 million tons in the 2019/2020 harvest," they point out.
“Factors suggest that soybean prices in Brazil will continue to rise, as record exports have reduced domestic supply compared to previous years. Domestic demand remains firm due to large purchases of soybean meal and oil. Low soy stocks are leading domestic industries to pay more compared to ports, ”conclude Colussi and Schnitkey.