Analysis: Watch the Brazilian Real

South America What Should We be Watching 041420

Farmers are always watching South America and its harvest during this time of the year. However, this year throws a curveball in the market mix. The world is still dealing with COVID-19 and the virus does not stop at the port.

“We have to be looking at the actual supply chain of getting [the crop] through the ports and out of the ports during a pandemic,” says Elaine Kub, author of Mastering the Grain Markets. “They are facing the same problems as we are here and the same challenges as getting workers to work safely.”

Kub says there is a potential for disruption to that supply chain with getting the crop to, from and loaded out of the South American ports. Kub says there are also changes with the ocean freight.

“I know a lot of ships are slowing down because there’s expectation of less demand in the United States,” says Kub. “To get those ships where they need to go and directed to whom might want those soybeans, that’s all moving and changing day to day.”

Kub has her eye on a key factor during this time and that’s the Brazilian real.

“The biggest piece that moves the price day to day at Chicago [the Chicago Mercantile Exchange] is the currency," says Kub. "If you see soybean prices go up, it’s almost always on a day when the Brazilian real is also going up.”  

Watch Elaine Kub’s analysis with Farm Journal editor and AgDay host Clinton Griffiths when you click the link.