Farmers deserve a Hallmark holiday of their own—and, in Brazil, it's July 28.
While most Brazilian Farmers' Days come and go without much note, this one may have producers reconsidering their 2015-16 cropping. Incessant Midwest rains coupled with the U.S. dollar's Everest-scaling climb have made beans look suddenly much more attractive this Farmers' Day.
True, the greenback's rise against Brazil's real has made inputs and the fuel it takes to get them to the farm that much more of a hit to the wallet. But if the dollar keeps climbing through the growing season, farmers know they'll get even greater financial rewards come harvest time.
Why plant more?
In a series of Farmers Day presentations at the Parana state Agriculture Federation, one analyst looked to a 2.47 million-acre increase in the national soy area this season, to 81.3 million acres despite the downward world trend in commodity prices.
It's all relative, of course. Soybean prices are generally going down though they've shown signs of life recently on Midwest weather issues. But that doesn't change the fact that world stocks are high and that the world's biggest bean consumer—China—has been suffering a slight case of financial hiccups that could turn into an economic reversal down the road.
You have to spend money to make money
But, "If at the Board of Trade both the market fundamentals and the financial indicators are acting negatively against grain prices," said analyst Flavio Franca Junior, "in Brazil, the government's difficulty in attracting speculative capital has helped sustain domestic soybean, corn and wheat prices at elevated levels."
That means that as Brazil's economy cools (some have predicted the economy will end up having shrunk 1.3 percent by the end of 2015) and looks less interesting to investors, the amount of U.S. dollar investments dries up, and the dollar gains strength in Brazil. And as dollars get stronger so do bushels of soybeans. Hey, farmers figure that they could make some real money on the bean crop this year, even if they have to spend more to produce the crop.
And if that's not cause for a Brazilian commemoration, what is?
The opinions of James Thompson are not necessarily those of Farm Futures or the Penton Farm Progress Group.