Grains –
The USD-BRL cross is basically steady at the time of writing this morning, but it remains close to recent lows. Meanwhile CBOT futures continue to rally, putting more reals in the hands of the Brazilian farmer these days. The chart below shows SK futures prices in reals per bushel, and as you can see by this measure we’re actually approaching the summer highs and we’re well above levels seen at this same point last year.
The chart below shows Paranagua premiums for Feb have been in steady decline recently, and as long as values for Brazilian farmers continue to appreciate I’d expect them to be continually willing to engage the market with sales as long as weather looks cooperative. As of right now, I see no major problems with Brazil’s current conditions or weather forecast so I’d look for farmer selling to become more and more active. If realized, this will keep Brazilian premiums under pressure and should undercut US export competitiveness from late-Jan forward.
Note that today’s soybean export inspections should be another fairly strong number…probably somewhere +/- 90 mil bu. Look for inspections to continually taper off in the weeks ahead as line-ups continue to back off.
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