If Brazil’s President Dilma Rousseff is impeached, trading companies and consultants have predicted that the real will continue to strengthen, reducing the country’s price advantage in local commodities, curbing foreign sales, Reuters reported on 14 April.

Although the country was experiencing a deep economic crisis, the currency had stabilised in recent weeks due to hopes from investors that the left-leaning Rousseff might be replaced by an administration that was more business friendly.

In the wake of the political instability, forward sales of commodities including grains and sugar had nearly ground to a halt.

According to Fabio Meneghin, senior analyst at Agroconsult, a leading Brazilian consultancy, “sellers and buys are basically just waiting to see what is going to happen”.

Reuters reported that if a more business-friendly government, for example headed by current Vice-President Michel Temer, took over, the real would lift to 3.10 to the dollar, according to brokerage and consultancy firm INTL FCStone. This was compared to 3.54 currently.

In the alternative scenario in which Rousseff stayed on, the real could fall to 4.10 to the dollar. This would increase the price advantage for Brazilian exports.

In regards to soyabeans, FCStone said if the impeachment was successful, total exports could fall to 50M tonnes, from the current estimate of 54M tonnes.

However, if Rousseff remained president, it predicted that Brazil could export up to 56M tonnes of soyabeans.

Impeachment would also have an effect on local ethanol production, due to a reduction in profitability if the ousting was successful, FCStone said local mills would be encouraged to increase ethanol production to sell the fuel in Brazil.

Reuters said that although they could potentially lose out on currency movement if the impeachment was successful, producers supported Rousseff’s removal from government.

An entity representing producers in Mato Grossa said producers feared that the economy would continue to deteriorate if Rousseff stayed.