Porto Alegre, August 20th 2026 – The U.S. corn crop is not yet defined; the final number will only be known in January. However, the August report from the Department of Agriculture – USDA is always a watershed between reality and expectations. This year, the major surprise for production was not the yield cut, but the increase in planted area, which offset the yield losses in this crop. This was not the main point of the report, despite the surprise in acreage. The reduction in stocks resulted from the increase in exports for both the old crop and the new crop, to 42 million tons in 2026/27. This is not a problematic stock level, but it depends on some indicators such as domestic feed consumption, as well as the export projection itself. In general, corn figures are beginning to become proportionally aggressive. Between 2025 and 2026, USDA points to demand growth of 77 million tons, followed by stabilization in 2026/27. There is no production system capable of maintaining an adequate balance with such fluctuations in production and demand, but that is agribusiness. For Brazil, this environment opens room for exports of corn and its derivatives, as well as for the new export market, sorghum. The exchange rate and the Chicago Board of Trade helped the Brazilian domestic market envision better export prices, and the focus remains on the pace of export shipments through January.
Segments of the Brazilian economy appear alarmed by the exchange-rate convergence toward an acceleration in the depreciation of the real. We could argue that the Brazilian currency would be weak relative to the international environment if domestic conditions were balanced, such as public debt, interest rates, economic growth, institutional risk, among other indicators. Claiming that the Brazilian currency should currently be below R$ 4.60/dollar is effectively ignoring the country’s main domestic problems, which have little chance of being corrected without a drastic change in economic policy.
This configuration became very clear when J.P. Morgan downgraded the Brazilian stock market and triggered a rush of capital outflows. The downgrade involves the obvious issues: the increase in Brazilian public debt, excessively high interest rates, and the absence of strategies to correct the trajectory. We simply do not know why the other rating agencies have not taken the same rigorous action. Capital outflows from the stock market approached US$ 12 billion last week, causing the exchange rate to jump close to the technical resistance level of R$ 5.22/dollar. The situation becomes mixed with politics, but it is purely a matter of economic mathematics.
The minutes of the August Copom meeting are surprising because of the delayed criticism directed at the federal government. We are not in a situation in which public finances only began to deteriorate in July, but rather in a chronic spending environment that even record tax revenue cannot support. This is nothing new for any segment of the Brazilian economy, and the reason for maintaining such high interest rates is quite evident: financing the domestic debt. Now, the government is also borrowing in euros and yuan, which should worsen an already serious situation.
The increase in Brazilian public debt should already have been a central topic in Copom meetings and their minutes. However, only now, in the final six months of the government, has the warning been brought more forcefully to the Brazilian financial market. Other points are also important, such as the mismatch between employment data and the number of companies closing in the country, as well as GDP showing very weak growth. Full employment and GDP pointing toward recession? The data are not converging.
Thus, despite the decline in the Dollar Index in New York during the week, the real depreciated because of the combination of indicators and, mainly, because foreign capital increasingly sees Brazil as losing its ability to remain a safe environment for investment. Brazil’s attempt to counter U.S. actions with tariffs — which involve cooperation on measures against drug trafficking and election monitoring in Brazil — through reciprocal tariffs could accelerate the loss of market share for Brazilian products in that destination, including meat and coffee, among others. This could undermine Brazil’s ability to generate comfortable trade surpluses to offset the sharp reduction in capital inflows.
The real now has resistance at R$ 5.22/dollar to test and, after that, R$ 5.33 as the next level. If capital continues to leave the country without a return of favorable inflows, the Brazilian currency could lose further value, and this has nothing to do with comparisons between the real and other international currencies.
