Grain market remains under pressure due to supply and weather

The grain market ended the week with strong volatility. Soybean prices fell in Chicago, reflecting the good progress of planting in the United States. In Brazil, the exchange rate helped sustain domestic prices, but sales remain slow. Corn is facing pressure from the second crop harvest, while a weaker dollar may favor purchases of inputs for the next harvest. The data is available in the Grão Direto Specialist Analysis of this Monday (2/5). Check it out:

How did the soybean market behave?

The international soybean market had a week marked by strong volatility. Prices in Chicago fell again, closing Friday with the July contract quoted at US$ 10,41 per bushel. The pressure came from the good pace of planting in the United States, favored by suitable weather conditions. According to the USDA, the growth is within the historical average, which reinforces the expectation of a full harvest.

In Brazil, the 2024/25 harvest is practically complete. There were reports of specific quality issues in Rio Grande do Sul and Paraná, but the focus is now on export premiums, which remain under pressure due to slow shipments, although premiums showed signs of recovery in the previous week. However, Brazilian soybeans remain competitive against American products.

The commercial dollar (PTAX) ended the week above R$5,70, helping to sustain the value of soybeans in the domestic market, even with Chicago falling. Even so, the exchange rate movement was not enough to unlock trading, which remains slow and marked by caution in the face of external uncertainties and pressure on premiums.

What to expect from the soybean market? 

The continued dry weather in the US producing regions maintains expectations of a good American harvest. The market remains attentive to weather reports and the pace of planting, factors that should continue to have a strong influence on prices in Chicago in the coming weeks.

On the Brazilian side, Anec revised its export estimates for May downwards, reflecting the slow pace of shipments and the competitiveness of international prices. This movement could keep export premiums under pressure, which tends to hinder the physical market domestically.

The external scenario also remains an important variable. The lack of progress in trade negotiations between China and the United States maintains a climate of uncertainty. Any sign of a resumption in negotiations could significantly impact international prices, and could even favor the Brazilian scenario.

Given this environment of ample supply and external uncertainty, producers are advised to strengthen margin management. Taking advantage of occasional price spikes and closely monitoring dollar and premium movements can ensure better sales conditions over the coming weeks.

How did the corn market behave? 

The Brazilian corn market remains under pressure due to a combination of growing supply and more restrained demand. The good development of the second crop along with the beginning of the harvest increases the availability of grain and may continue to put pressure on prices in practically the entire country.

Domestic demand remained stable, with more cautious buyers waiting for better purchasing opportunities. The ethanol and feed sectors remained active and helped limit a further drop in prices, but were not yet enough to reverse the downward trend.

In the international market, prices in Chicago also fell. The main pressure came from the good progress of planting in the United States and the weaker volume in foreign sales. The July contract closed the previous week at US$4,44/bushel, reflecting this downward movement.

What to expect from the corn market? 

The good development of the second crop and the beginning of the harvest should keep the market under pressure in the short term. The high supply tends to continue to negatively impact prices, especially while buyers maintain a more restrained stance.

Despite this, sectors such as ethanol and feed should continue to contribute to supporting the market, especially in specific moments of sharper decline. Demand, although stable, can play a relevant role in containing more aggressive downward movements.

In the external scenario, the market is paying close attention to the release of the next US crop development reports, released every Monday by the USDA. Updated estimates of global production and stocks may bring new volatility to futures contracts. The USDA supply and demand report will be released on June 12 (next Thursday).

The weather in the US producing regions will remain on the radar, being one of the main indicators of international prices in the coming weeks.

Dollar and macroeconomics

The US currency continues to weaken globally, reflecting both domestic economic data in the United States and the more diplomatic tone between the major global economies. The improvement in trade relations between the US and China has reduced the level of risk aversion in the international market, favoring emerging currencies such as the real, but internal economic decisions in Brazil may limit the fall of the US currency against the real.

In Brazil, expectations are focused on the release of the IPCA, while in the US, the market is closely monitoring the CPI. These inflation indicators are important because they can change the outlook for interest rates and directly impact the exchange rate.

For agribusiness, the appreciation of the real reduces the competitiveness of Brazilian exports, making products less attractive abroad. On the other hand, a more favorable exchange rate can help improve the conditions for purchasing agricultural inputs and implements, which is positive for planning the next harvest. Given the recent appreciation of inputs, the drop in the dollar may favor producers in making purchases.