Morgan Stanley: Weaker Brazilian real weighs on agricultural prices as tightening sugar supply supports Morgan Stanley’s bullish view

Why does a weaker real weigh on agricultural prices?

Soybean prices fell 2.73% this week to 12.22 dollars per bushel, while corn fell 1.81% to 4.48 dollars per bushel. Morgan Stanley noted that the real’s depreciation after Brazil’s election made Brazilian exports more competitive and encouraged farmers to sell.
Sugar prices also fell 3.76% this week to 19.47 cents per pound, pressured by the real’s depreciation and rising uncertainty over government fuel policy, even though rain has reduced Brazilian sugarcane crushing and sugar production.

Soybean planting in Mato Grosso for the 2026/27 season reached 89.1%, up 13.2 percentage points from the previous week. It was above the five-year average of 78.5% and last year’s 76.1%, and exceeded the highest level recorded at the same point in the past five years.
Morgan Stanley believes faster planting has eased concerns about the timing of the soybean harvest and subsequent second-crop corn planting, thereby reducing supply risks for the second corn crop.
Weather conditions are changing: rainfall in the state is expected to be below normal in the period ahead, while soybeans are entering a more weather-sensitive growth stage. Prolonged low rainfall and high temperatures could affect crop development.

Sugarcane crushing in Brazil’s Centre-South totaled 27.3 million tonnes in the first half of October, down 21.3% year on year and below the five-year average. Persistent heavy rain is expected in São Paulo state and could continue to disrupt sugarcane harvesting.
Since 1 April, cumulative sugarcane crushing in the Centre-South has totaled 509.7 million tonnes, down 2.9% year on year; cumulative sugar production has totaled 30.8 million tonnes, down 14.6% year on year and below the five-year average.
Morgan Stanley believes declining Brazilian supply, together with El Niño-related disruptions, could further tighten the global sugar supply-demand balance, and therefore maintains its bullish view on sugar.

The US corn harvest was 60% complete, up 16 percentage points from the previous week but still below the five-year average, with several major Midwestern states significantly behind. The soybean harvest was 79% complete, up 15 percentage points in a week and ahead of last year and the five-year average.
Argentina’s corn planting for the 2026/27 season was 47.3% complete, up 7.5 percentage points in a week and 12.3 percentage points ahead of the same period last year. Soybean planting had just begun and was 2.3% complete, broadly in line with the five-year average of 2.4%.