As soybean prices skyrocket, global grain traders are looking for their very own spy kids to keep an eye on Brazilian farmers.
The situation: Casual contracts – communicated months ago via WhatsApp, phone calls, and emails – are tempting farmers to dump deals and double their profit by selling at current market prices.
Farmers claim that verbal agreements aren’t contractually binding or cite a washout clause allowing them to resolve their contracts without delivering on their commitments.
Undercover cops: In response, trading companies have set up satellites and spies to surveil farmers, making sure they don’t secretly sell their soybeans to another buyer. Lawsuits have been brought against farmers who have walked away from contracts.
Despite grower privacy and harassment concerns, tough tactics seem to be working. Courts are mostly siding with traders.
Zoom out: Soybeans have rallied to an 8-year high, and China has been a big buyer of Brazilian beans as their pig herd bounces back from African Swine Fever. But Brazilian soy exports are expected to fall in May as China dials back its demand following their large purchases.
But wait, there’s more: Brazilian soybean exports are actually set to take a back seat to iron ore exports for the first time in six years, driven by demand from iron ore producer Vale and – you guessed it – China.