Archer Daniels Midland (ADM) has stated that it expects profit margins for 2015/16 Brazilian soy to fall 77% year on year after two seasons of falling prices.
The group’s South American president, Valmor Schaffer, expects profit margins of 122.20 reais (US$35.42) per hectare, down from a margin of 539.03 reais (US$154.50) in 2014, with the weakening Brazilian currency the only thing keeping margins positive.
Brazil’s currency has fallen by 35% within the past year alone, bringing the currency value to its lowest point in 12 years. The weaker currency means more local reais for farmers for each bag of soy exported, but it also translates into higher costs for dollar-denominated inputs such as pesticides and fertilizers.
Lynda Kiernan is Editor with HighQuest Group Media and of the Oilseed & Grain News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at email@example.com.