Brazilian farmers are selling more of next year's soy and corn harvest since the US dollar strengthened past 4 reais in August, driving up the value received by producers pricing the crop in the local currency, according to analysts.
Sales of the 2018-19 crop had previously been slow as farmers, concerned over the country's move to set minimum truck freight rates raising transportation costs, held off on signing forward sales contracts.
Brazil's real finished at of 4.1951 to the dollar on Thursday, its lowest closing since the currency's creation in 1994, as a sell-off driven by uncertainty over the country's most wide-open election in decades continues.
Farmers had sold 22.8 percent of next year's soy production as of Sept. 6, double the level seen at the same time last year, although below the historic average of 25.8 percent, according to consultancy Safras & Mercado.
The stronger dollar is benefiting farmers who price their commodities in reais driving them to commercialize more of the next crop despite the international price for soy being near a 10-year low.
"Negotiations are flowing much better," said Fernando Iglesias, a Safras analyst.
"The trend is for things to continue in this way because of the movement in the exchange rates. Trading companies are being more active in buying."
For corn, the state of Mato Grosso, the country's largest producer, saw forward sales advance 10 percentage points in just one month to 24 percent as of the end of August, the Mato Grosso Institute of Agricultural Economy said on Monday.
But while some farmers gain, producers who have US dollar debt or that sell in dollars are being hurt, said Fernando Muraro, an analyst with the consultancy AgRural.
Muraro estimates that 25 percent to 40 percent of the planted area in Brazil is financed in US dollars, depending on the region. "For those who do business in reais, it's beautiful. In dollars, it's terrible," he said. "One foot is in the oven and the other is in the cooler."