Last week the Argentina government allowed the peso to float versus the dollar and other world currency, causing the value to fall nearly 40%. This meant Argentinian farmers saw their stored beans increase substantially in value overnight. Eventually these farmers should be big sellers, as they are sitting on a large portion of the worlds’ bean supply. But when? It’s unlikely they will sell right away. Many farmers will wait to understand how the devaluation will affect inputs next year against current prices. Long-term, I expect this devaluation to limit upside potential in the bean market.
On a the flip-side of the market, there are some dry weather concerns creeping into Brazil. Precipitation forecasts are varied, which may cause volatility in the market. Combine this with speculators evening out their positions at the end of the year, there may be opportunities for farmers to catch up on sales in the next two weeks.… Continue reading