Highlights
The dollar index traded to 106.57 on Tuesday. Last Friday, the dollar index was at 104.30. In the world of exchange rates and commodity prices, that 2.27 point move in two days is a minor earthquake and it did damage to your operation.
The first week of January, the dollar index was 101.38 and it took 4.85 Brazilian Real to buy a US dollar. If soybeans were $11 a bushel, a Brazilian farmer would be paid 53.35 Reals per bushel. On April 9th, the same $11 beans would be worth 55 Reals. But on Tuesday, $11 beans would fetch 58.19 Reals. That is 9% more Reals per bushel since early January and half of that 9% was “created” on Monday and Tuesday of this week! That is like soybeans going up 48¢ from the first of the year until April 12th, and then gaining another 48¢ on Monday and Tuesday of this week! You can see why farmers in Brazil are going to sell this week!
We all need to realize that when the dollar index goes up, not only do US soybeans (and everything else we export) get more expensive to foreign buyers, but Brazilian farmers get paid more because of the exchange rate change.