Grão Direto reveals the impact of rains on Brazilian soybeans

This week's Grão Direto Expert Analysis, released today, indicates the progress of the 2024/25 soybean crop planting in Brazil and the appreciation of Brazilian soybean prices on the market. In addition, it points to the competitiveness in the global corn market and the volatility in grain prices based on the results of the US elections, which should be decided starting next week. Check it out: 

Soybean

How did the market behave?

Brazilian planting

The regular presence of rain in the vast majority of Brazilian regions, which significantly boosted the planting of the 2024/25 harvest. According to Conab, planting has already reached around 18% of the total projected area, but is still behind last year.

Heated demand

According to the USDA, the US sold around 2,1 million tonnes of the 2024/25 harvest. The main destination was China, which bought around 1,3 million tonnes, followed by Mexico with 208 thousand tonnes.

In Chicago, the January 2025 soybean contract closed at US$9.98/bushel (+1,53%). The March/2025 contract also followed the same trend, rising 1,20% to US$10,09/bushel. Consequently, Brazilian soybean prices closed the week with an increase.

What to expect from the market?

Brazilian planting

Sowing will continue to advance in Brazil, especially with the arrival of regular rains in several regions. However, the northern portion of the Center-West is not expected to receive heavy rains, while in the Center-South, rains will continue to be more intense and regular, favoring the progress and initial establishment of crops.

US elections

Next weekend, Americans will go to the polls to elect their next president. According to polls, the race between Democrats and Republicans promises to be extremely close, possibly the closest in history. If the Democrats, Donald Trump's party, win, the dollar could strengthen due to the president's protectionist stance. In addition, the trade war with China could resurface, influencing negotiations between the two countries.

Trade war and Brazil

A new trade war with China could impact premiums in the Brazilian soybean market, but probably without the intensity seen in 2018. Today, Brazil occupies a dominant position in the global market and is one of China's main suppliers. On the other hand, prices in Chicago could suffer strong negative pressure, as the stock exchange mainly reflects the reality in the US. In this scenario, Brazilian producers could find good opportunities given the volatility that is expected to influence prices.

North American harvest

It continued to advance satisfactorily, reaching, according to the USDA, 81% of the total projection. This number is 14% above the average of the last 5 years, and 9% above last year.

The soybean harvest is expected to continue to advance significantly in the US, potentially surpassing 90% and coming very close to completion in the coming weeks. The greatest pressure from the harvest on Chicago prices has already passed, but the volume harvested should continue to meet the needs of importing countries, especially China. Despite the uncertainties regarding the market after the elections, the Asian country has been taking advantage of these last few days to meet its demand.

Graphical analysis

Soybeans quoted in Chicago firmed above US$9.80/bushel (January/25 contract), closing the week quoted at US$9.97/bushel, up 1,50%. It surpassed the US$10 region but suffered selling pressure when it reached US$10.18/bushel. Points of attention for the week (considering the Jan/25 contract):

In case of lows, US$9.90, US$9.80 and US$9.75 are regions that the price may have difficulty breaking before testing the lows (US$9.55).

Considering a bullish scenario, the break of the US$10.10 region could enable tests of the US$10.30 region and trigger a long-term bullish sentiment. Brazilian soybean prices, on the other hand, will depend on a more concrete direction of the dollar and premiums. The exchange rate closed the previous week showing indecision, where it varied positively and negatively throughout the week and ended Friday's trading session close to the opening value at the beginning of the week.

Corn

How did the market behave last week?

North American exports

Corn exports increased 62% compared to the previous week, surpassing 3,6 million tons. Mexico has been the main destination for the cereal, with 1,7 million tons.

Planting summer corn

According to Conab, planting has reached 32,3% of the area projected for the 2024/25 harvest. The number is in line with the same period last year, which was at 33%. Paraná is close to completion, with 90% of the projected area.

Brazilian exports

According to Secex, the volume exported in October reached 3,9 million tons. This number represents 46% of the same period last year. This is mainly due to the more competitive origins in the market.

Corn closed the week quoted at US$4,16 per bushel (+2,97%) in Chicago, for the contract expiring in December 2024. In Brazil, on B3, corn followed the same trend, with a significant increase of 4,77%, closing at R$72,55 per bag in the November 2024 contract. In the physical market, movements were mixed, with highs and lows distributed throughout the country, with a predominance of highs.

What to expect from the market?

North American demand

In recent weeks, U.S. corn has been in high demand, with prices more competitive than those of other countries, especially Brazil. The lower volume exported by Brazil compared to last year reinforces this competitiveness. Mexico has emerged as the main buyer of U.S. corn, accounting for about 42% of corn sales for 2024/25. In addition, Japan is also a major importer, and has already reached its highest volume in four years.

Brazil's internal demand

Brazilian exports are slow, especially compared to last year. However, domestic consumption has been quite strong and growing in recent weeks. This scenario has supported and even boosted cereal prices, which are being traded above export parity. The high price of beef, together with the growing demand for corn for ethanol production, are the main factors behind this appreciation.

Argentina Harvest

According to the Bolsa de Cereales, Argentine corn has already covered approximately 24% of the projected area. This rate is higher than last year and is in line with the average of the last five years. The threat of the leafhopper, a pest that caused significant losses last year, is on the radar of producers, who are seeking to mitigate risks by planting earlier. A delay in planting could lead farmers to reduce the area dedicated to corn, which would negatively affect the global supply of the cereal.

Graphical Analysis

Corn prices in Chicago remain above US$4.10/bushel (Z contract - December), raising expectations of growth. Regions that may impact price movements:

Considering a bullish scenario: US$4.24, US$4.28 and US$4.34 are regions where the grain may have difficulty breaking through to maintain an upward movement.

Bearish scenario: if corn priced in Chicago loses the US$4.10 region, the US$4.03, US$3.97 and US$3.90 regions are regions that can hold back the initial fall in the grain.

Given the scenario outlined, the week could see corrections in BM&F prices, mainly due to the possible correction of the dollar. The scenario should not directly reflect on the physical market, which still has buying pressure in some regions.