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South America's growing season enters home stretch

Agriculture.com Staff 02/16/2006 @ 2:05pm

The rainfall continues to be adequate, or more than adequate, in Brazil. In the northern state of Mato Grosso, harvest has begun, where combines are able to dodge the rain. Around 10 percent of the crop has been harvested. There were some dry days, then a rainy spell, but more dry days are in the forecast. Harvest will slowly spread south—the bulk of the harvest is actually in March and early April.

The southernmost beans in the country (in Rio Grande do Sul) have been dry once again, although rain should arrive in the next day or two. Argentina once again has had a longer stretch of dryness—first with cool temperatures, and now with hot temperatures. Rain is in the forecast for next week and then temperatures will cool. With no trading until Monday night (Presidents’ Day holiday), next week’s rainfall forecast will be key. There are double-crop beans in Argentina and these beans in particular could benefit from rain.

There is also the possibility that last year’s Brazilian crop was larger than previously estimated. Exports out of Brazil have been stronger than many thought possible, leaving analysts to wonder where the beans are coming from. US farmers and exporters certainly have felt the competition from Brazil, as US exports lag year-ago figures and our market share to China and the European Union has declined.

South American yields and crop size take a backseat to the currency exchange rate when evaluating the Brazilian farmer’s situation. The Brazilian real is so strong (a 4 ½ year high) that soybeans, which are priced in dollars, are unbelievably low priced. Futures prices are about the same right now as last year. But the real is 35 percent higher—bean prices are 35 percent lower. If Mato Grosso harvest prices last year were $4.50, then this year they are around $3.00.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

The rainfall continues to be adequate, or more than adequate, in Brazil. In the northern state of Mato Grosso, harvest has begun, where combines are able to dodge the rain. Around 10 percent of the crop has been harvested. There were some dry days, then a rainy spell, but more dry days are in the forecast. Harvest will slowly spread south—the bulk of the harvest is actually in March and early April.

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