Grain market demands caution from producers, says Grão Direto

Volatility in international prices, advances in planting in the United States and a decline in the dollar marked the week for the soybean and corn markets, requiring producers to be cautious in marketing and pay close attention to margin management. Check out more information in the Grão Direto Specialist Analysis released today (5/5):

How did the soybean market behave?

Volatility and American planting in focus: The week was marked by strong volatility in international prices. In Chicago, prices began under pressure due to the good pace of planting in the United States and favorable weather. According to the USDA, planting is within the historical average.

Chicago quotes under pressure: After weeks of recovery, soybean prices in Chicago have fallen again, pressured by the favorable climate for advancing planting in the US and the absence of new concrete signs in trade negotiations between the US and China.

Brazil with harvest almost finished: The harvest is practically over, with occasional quality problems in RS and PR. The focus is on export premiums, which continue to be pressured by slow shipments — but are still supported by the good competitiveness of Brazilian soybeans compared to American ones.

Dollar retreats: The US currency closed the week at R$5,69, down, which limited gains in the physical market. The combination of a weaker dollar and unstable international prices generated caution in negotiations, keeping the pace of trading slower.

What to expect from the market?

American harvest progresses: The dry weather trend in the main US producing states continues to reinforce the expectation of a full harvest, which adds pressure to Chicago. The market continues to closely monitor the weather reports and the planting pace.

Exports in focus: Anec revised downwards its estimates for Brazilian soybean exports in May. Slow shipments and pressured premiums should keep the physical market on hold.

Trade war: The scenario between China and the US continues without concrete progress. Any sign of progress could move prices immediately, but, for now, the market operates with uncertainty.

Recommendation: In an environment of ample supply and external uncertainty, producers must strengthen margin management and take advantage of price spikes to make specific sales. Monitoring the dollar and premiums is essential for strategic decisions.

How did the corn market behave?

Supply pressure: The corn market remained under pressure in Brazil, with falling prices in practically all regions. Supply increased with the progress of the first crop harvest and the good conditions of the second crop in the Center-West and South.

Slower demand: Buyers were cautious, waiting for better opportunities. Domestic demand remains stable, with emphasis on ethanol plants and the feed sector, which help to limit sharper declines.

Chicago still under pressure: Abroad, corn also fell, influenced by the advance of planting in the US and weaker sales. The July contract closed at US$4.69/bushel the previous week.

What to expect from the market?

Growing supply and cautious demand: The climate scenario remains favorable for the second crop, and the first crop harvest is progressing. With buyers more withdrawn, the tendency is for downward pressure on the physical market to continue, especially in the short term.

Demand may limit larger declines: Even so, sectors such as ethanol and feed maintain a certain appetite, which could prevent more aggressive declines, especially if there are specific rebounds.

Attention to USDA: The release of the new supply and demand side (WASDE) report on May 12 could bring additional volatility to international prices. The pace of planting in the US will also continue to be closely monitored.

economic scenario

Dollar: The US currency continues to weaken against the real, with the focus on US economic data and the evolution of trade tensions with China. This week, indicators such as the IPCA (Brazil) and the CPI (USA) may move the exchange rate and, consequently, directly affect the competitiveness of Brazilian exports.

Calmer external scenario: The improvement in the diplomatic tone between the US and China also brought some relief to the market, reducing the search for protection and contributing to the appreciation of emerging currencies, such as the real.

Impacts on agriculture: This drop in the US currency directly affects the competitiveness of Brazilian exports, making products less attractive abroad and putting pressure on prices in the physical market, especially for soybeans and corn. However, it can improve the conditions for purchasing inputs and implements.

Recommendation to the producer

In an environment of ample supply and international uncertainty, margin management becomes even more strategic. Be alert to specific trading opportunities, take advantage of moments of price rebound and trade based on updated information. The scenario requires caution, but it can also offer good windows for profitable price locks.