Soft exchange rates coupled with shrinking crop forecasts continued to weigh on forward sales of Brazilian soybeans last week.

While the market continued to wonder how much of the 1989-90 (October- Septe mber) soy crop there will be, Stephen Geld, a trader, commented that ''the crushing industry does not consider the current exchange rate to be competitive for soy product exports."The continuing problem is the result of the Brazilian government's March 16 decree to abandon its prior practice of fixing exchange rates arbitrarily, substituting the old system with a new "floating rate" mechanism. The only problem is that current exchange rates are still running slightly below the last official rate of 42.506 Brazilian cruzeiro to the U.S. dollar, set on March 13.

However, April-May export shipments of soybeans and soybean products ''seem fairly well assured," said one trader. "Many producers and crushers felt obliged to close deals for April-May shipment at the end of last year. They were cash short at the time and needed the money for planting. Now would normally be the time to sell for June-July shipment, but there is almost no activity in this regard as the market awaits exchange rate improvement.

Most analysts, including government economists, have said they believe

dollar rates will rise. "By June the rate will have risen to cover costs and more," Savio Pereira, government farm economist, said.

''Commodities exports will be normalized by then."

Meanwhile, the crop continued to suffer from dryness in certain regions.

''The crop forecasts keep shrinking," a trader said. "The number I'm using now is 19.4 million to 19.8 million metric tons."

"We've seen the first results of the harvest in Parana, and there are a couple of areas where dryness has damaged yields dramatically," a cooperative member said.

Market newsletter Safras e Mercados last week forecast the 1989-90 soybean crop at between 19.873 and 20.243 million tons, slightly lower than its February estimate of 19.988 to 20.591 million tons. The crop last year totaled 24.1 million tons.

Another trader said the Safras figures were on target "for the period studied. The problem is that the Safras numbers are at least a couple of weeks out-of-date. Conditions in parts of Parana and in Mato Grosso do Sul have worsened since the Safras estimate was made, so the market is cutting off another several hundred thousand tons, with most private estimates today around 19.5 million tons."

Safras noted that the continuing decline of the crop was due to more than just lack of rain.