Political unrest in Brazil weighs on U.S. soybean prices
The latest Brazilian political scandal sent U.S. soybean futures plummeting overnight.
Following the impeachment of former president Dilma Rousseff less than two years ago, current president Michel Temer is alleged to have taken part in a cover-up involving meat giant JBS.
Don Roose, president of U.S. Commodities, says more political uncertainty in Brazil has weakened that country’s currency—the real.
“The fear is that it’s going to cause producers that have been undersold, much like in the U.S. on corn, to pick up their selling pace. And yesterday, with the real down 1.4 percent, we did see about 650,000 metric tons of soybeans sold.”
The increased farmer selling put pressure on futures overnight, with soybeans down around 20 cents and corn off six.
Roose tells Brownfield the bigger issue is a bloated global supply of corn, soybeans and wheat.
“Just the opposite of last year when we had the crop getting smaller and uncertainty over how small the crop was. So we’ve got a big buffer here, but that doesn’t mean that we can’t still respect weather down the road.”
He says while the situation in Brazil is negative for U.S. prices, the markets continue to be range-bound.
Roose expects corn and soybean futures to bend towards the lower end of the range for now, but says weather will dominate trade throughout the growing season.
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