Soybean prices surged, albeit to varying degrees, in all producing and trading regions of Brazil this week. In addition to the need for cash to settle financial commitments by producers, the boost primarily came from the dollar and premiums in the domestic market.
During the week, soybean futures traded on the Chicago Board of Trade accumulated losses of about 2% in the most traded contracts, despite significant gains in this last session of the week. The May/24 contract dropped from US$11.75 - last Friday (12th) - to US$11.50 at the close of this Friday (19th), a decrease of 2.04%. July saw a 1.77% decline, falling from US$11.86 to US$11.65 per bushel. During the same period, the dollar rose from R$5.13 to R$5.20, accumulating a gain of 1.36%.
"We already have spot premiums at the best levels for offers from the 2024 harvest since the start of the 2024 crop marketing campaign. These are not yet good premiums, it's relative, but they show a significant improvement," explains Matheus Pereira, director of Pátria Agronegócios. "And for every 10 points of premiums, with the dollar around R$5.00, it's equivalent to something like R$1.10 to R$1.15 per bag. So, if it rises by 30 points, that's almost R$3.30 of surcharge just in premiums."
This movement, combined with the strengthening dollar against the real, allowed soybean prices at Brazilian ports to accumulate a gain of over R$10.00 per bag in the last 35 to 40 days. "Not all of this gain has been passed on, but part of this gain has indeed been passed on to the entire interior of Brazil," Pereira adds.
According to Pereira, much of this upward movement in premiums is linked to the actual size of the Brazilian crop, reinforcing that "the premiums market is a market where there are no distortions."
"If we had a crop the size that some people believe, a record-breaking, full crop, we wouldn't have premiums recovering as we do now. Just remember the last crop cycle, when in May we hit rock bottom for Brazilian premiums, 220 cents per bushel negative, due to oversupply. It's indisputable that the previous crop was a record crop. But at the current moment, with premiums already on the rise, with continuous recovery - also expected for the coming weeks - it's a clear sign that the current crop is smaller than expected by some and also due to this sales restriction," details the analyst.
Moreover, although the supply is on the market, it may become "unmarketable" at this time, with producers being more restrained in their deals going forward.
Despite this week's advance, the commercialization of Brazil's 2023/24 soybean crop remains delayed, as explained by market consultant Vlamir Brandalizze, from Brandalizze Consulting. According to his survey, about 72 million tons have already been committed, out of an estimated crop by Brandalizze Consulting of 148 million. The "normal" for this period would be a volume exceeding 85 million tons traded.
Just this week, over three million tons of soybeans were traded, the consultant also reports, adding that producers are maintaining the pace of April, which is traditionally a period of many deals, focusing on ensuring commitments. "Deals are happening in a widespread manner, even in Rio Grande do Sul, where deals were very slow, with prices at the best time of the year for the local market," he says.
NEW MOMENTS AND OPPORTUNITIES
Vlamir Brandalizze highlights, however, that the supply pressure from producers may, by the end of this month, "slightly disrupt this market, causing even premiums to fall. Because the tendency is to sell a lot, because the producer needs cash, a lot of sales until the end of the month. And as the month turns, what we can see is a retraction from sellers, waiting for the market to improve," he states.
Thus, in summary, the consultant explains that the end of April may reserve some pressure on soybean prices in the Brazilian market due to growing supply due to more necessary deals by Brazilian producers, but a new boost presenting itself in early May with a new moment of restraint from producers.
CHICAGO BOARD OF TRADE
This Friday, soybean futures gained momentum, recovering part of the losses from the previous session and ending the day with gains of 14 to 16.25 points. Once again, the meal market led the grain. Meal futures rose more than 1.5% in the afternoon, still reflecting concerns about supply in Argentina, as well as following the strong rise in wheat, which had over 2% gains among the most traded positions on the CBOT, with the first position being quoted at US$5.64 per bushel.
In addition to meal and wheat, soybean oil prices also rose - which were negative at the start of the day - further contributing to soybean prices. The gains were just over 0.3%.
Two other factors favoring soybean highs in Chicago are the falling dollar - against the real losing more than 1% and reaching R$5.20 - and better demand for U.S. soybeans this week, with a new sale announced by the USDA (U.S. Department of Agriculture) this Friday.
It was 121.5 thousand tons for undisclosed destinations. Of the total, 13.5 thousand are from the 2023/24 crop and 108 thousand from the 2024/25 crop.
For soybeans, attention remains on the weather in the United States, where planting is just beginning, as well as on the conclusion of harvests in Brazil and Argentina. For now, conditions in the Corn Belt are suitable for fieldwork, with soybean planting slightly surpassing 3% of the expected area.
Comments