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South Central Iowa | I can't explain everything, but I can make a comparison. When we hit $10.80, the dollar index was at 101.30. If we shrink to $9.50 and the dollar gets through 99.00 and drops down to support at 96.00, that would be a 5.2% decline from the 1/18 close. That would make that $9.00 effective price of $9.50. So our soybeans gain the advantage of $1.80 or $66 a metric ton in comparison to January. As it stands right now at $9.75 and 99.40, we have an effective price of $9.57.
This makes us more competitive in the global marketplace. With a strengthening Real, Brazil will become less competitive and their producers even less willing to sell. On 1/18, the Real was trading at 3.23 per dollar, making the price 34.88 Reals per bushel. Now the Real is trading 3.10 making their current price with $9.75, 30.23 Reals per bushel. If the Real declines to a target of 2.88 and our soybeans fall to $9.50, they will only be getting 27.36 Real per bushel. Last year with currency relationship, when we were receiving $9.00 board, they were getting 36 Reals.
They have already seen a $1.50 USD drop in price while we have seen a $1.05. If currency drops and we go to support in the $9.50's, our $1.30 decline while be the equivalent of a $2.61 decline for Brazilian producer. This is where fundamental support will come in. We will decimate them in the export market. Commercials own all our beans and want to move them.
Edit: It's fine being opposite so long as you have ideas based on reason and logic! That's called discussion and debate!
Edited by Conan the Farmer 3/26/2017 20:55
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We have green
