Grão Direto reveals trends and expectations for soybeans and corn

Grão Direto has just released its latest Expert Analysis, which examines recent fluctuations in the soybean and corn markets, highlighting how adjustments in supply and demand reporting have impacted prices and exports. 

The study reveals a significant drop in soybean prices, influenced by an optimistic North American harvest, and assesses the prospects for the corn market in light of factors such as the off-season harvest and geopolitical concerns in the Black Sea. The analysis also projects future trends for both grains. Check it out: 

Soy: how did the market behave? 

Supply and Demand Report: planted areas, productivity and production were revised upwards. North American exports were corrected upwards, from 49,67 to 50,35 million tons.

Fall week: The report's numbers triggered a significant downward movement during the week, which was strengthened by the optimistic scenario for the North American harvest.

Brazilian exports: In the first seven business days of August, Brazil exported almost 2,4 million tons of soybeans, with China as the main destination. Year-to-date, exports total 77,8 million tons.

In Chicago, the soybean contract for August 2024 closed at U$9,37 per bushel (-5,16%). In the Brazilian physical market we had downward movements, influenced by Chicago and the dollar, which fell 0,91%, to R$5,47 in the last week. The contract expiring in March 2025 also closed pessimistically and fell 4,16%, to U$9,90 a bushel.

What to expect from the market? 

North American harvest: data proves that the United States soybean harvest has recorded the best conditions in recent years. And this was reinforced by the supply and demand report, which brought a positive adjustment to the planted area and productivity, resulting in a production projection estimated at 124,9 million tons. Demand also increased, but it was not enough to change the positive balance of oilseed supply in the USA and around the world.

What can change this scenario? 

Global demand is expected to increase just 2,2%, while production is expected to grow 8,5% in the upcoming season, which starts next month. This results in a scenario with a very favorable balance for the offer. The 2023/24 North American harvest season is coming to an end with a result below expectations, with an expected production of around 46,27 million tons, according to the USDA, which represents a drop of 15% compared to to the previous harvest. 

For the next season, which also starts next month, an increase of 8% is projected, with a predicted volume of 50,34 million tons. In Brazil, expectations for the next harvest remain at 105 million tons. In short, what could change this scenario will be an unexpected result, whether on the supply or demand side.

Graphic analysis: prices in Chicago have fallen significantly since June 2022. After breaking the bands between 11,20 and 12,00 dollars per bushel, prices sought levels between 9,70 and 10,50 dollars per bushel, returning to the region in where they were before the increase caused by the pandemic. After breaking the last positions, prices could reach the level of 9,45 dollars per bushel. Although there are still no signs of a reversal of this trend, it is believed that it is close, as prices are significantly devalued, causing losses to North American producers.

After weeks of considerable drops, prices may have a week of correction/profit making, giving relief to Brazilian producers, who are also suffering from the fall in the dollar at the time of marketing.

Corn: how did the market behave last week? 

Supply and Demand Report: North American productivity rose from 189,35 to 191,55 bags per hectare, taking the harvest to 384,74 million tons. Ending stocks, on the other hand, fell from 53,26 to 52,67 million tons.

Harvest of the 2024 off-season: The harvest of the second corn crop rose from 91,3% last week to 94,7% of the total planted in the country, surpassing the 72,4% recorded in the same period in 2023.

Geopolitical conflict: Concerns have grown over Black Sea corn exports, which could be affected by recent Russian bombings on the port of Odessa.

Chicago prices ended the week at US$3,70 per bushel (-1,86%), for the contract expiring in September/24. On B3, corn fell 1,11%, worth R$59,29. In the physical market, the movement was predominantly negative, following the trends noted in Brazil and the USA.

What to expect from the market? 

Brazilian exports: in the last update made by Secex, Brazil had produced around 1,9 million tons in 7 working days. The number, so far, is significantly lower than that of the same period last year, which had exported 2,8 million tons (-32%). There is still a very high divergence between the forecasts from Conab and USDA, which estimate exports of 36 million tons and 49 million, respectively. According to Grão Direto's analyzes and projections, Brazil should export around 45 million tons, needing to maintain a monthly average of 6,6 million tons.

Largest importing countries: despite the export movement being slower this year, China still maintains its leadership position, purchasing 1,62 million tons until the month of July. Egypt and Algeria have also stood out, occupying second and third place with 1,61 million and 1,13 million tons, respectively. This scenario contrasts with last year, when Japan led the rankings, but has now dropped to 10th place. However, it is important to highlight that historically the largest volume of exports is concentrated in the second half of the year, which means that this current scenario could still change significantly.

New chapters between Russia and Ukraine: A new attack by Ukrainian forces made it possible to advance into small Russian territory last week. However, there was a counter-offensive by the Russian military, ending another chapter in the conflict between the two countries. The Russian army carried out a new bombing of the port of Odessa, raising new concerns about the capacity to transport Ukrainian grain. If there is any significant limitation on the flow of Ukrainian grains, it could result in good opportunities for Brazilian cereal.

Considering the factors mentioned above, the corn market is likely to face another negative week, although the declines are not expected to be as sharp as those seen last week.