Controlling Brazilian FX for Exports

Brazilian poultry meat exporters have been counting the cost of a 25% rise of the Brazilian Real against the US dollar. This means that processors have been getting steadily less for their exported products in local currency terms. It has been calculated that the prices processors are now getting are 20% less than they were a year ago.

A global fall in soybean prices could come about in January and February 2010 if the slow US harvest means that US soybeans are still on the market when Brazilian soybeans arrive. Currently growers in Brazil are anxious to capture demand from China and are subsequently planting rapidly maturing soybean types – which will be harvested early. If the two compete directly the strength of the BRL could remove Brazilian soybeans competitive advantage. However investment into Brazil’s biodiesel industry is facilitating a growing domestic soybean demand which could mitigate against this clash of market soybean producers.

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