The last week of the year was shorter in Chicago due to the “Christmas” holiday. After the return, the market sustained itself reflecting the climate situation, still quite unfavorable in Argentina, and the continued improvement in demand prospects in China. As a result, the contract expiring in January/2023 ended Friday at U＄15,19 per bushel (+2,64%). The contract expiring in March/2023 followed the same trend, closing the week at U＄15,24 per bushel (+2,56%).
Although the beginning of the week was affected by the occasional improvement in the weather in Argentina, with unexpected rains during the weekend, this was not enough to bring relief to the state of alert that the country is facing. According to the Buenos Aires Cereals Exchange (BCBA), planting of the 2022/23 harvest increased the weekly pace, reaching 72,2% of the projected area compared to 81,4% in the same period of the last harvest. However, the conditions of crops already sown are significantly impaired, with only 10% of them in good/excellent conditions, compared to 57% the previous year.
In Brazil, planting was technically completed, according to the National Supply Company (Conab), on 12/12. At a national level, crops were in satisfactory development conditions, with widespread and voluminous rainfall, with the exception of Rio Grande do Sul. In Mato Grosso, harvesting began in some areas.
Finally, the continued relaxation of Covid-19 health measures in China has increased expectations of an economic recovery. The proximity of the “Chinese New Year” holiday strengthened the expectation of an increase in demand, despite increasing the risk of infections due to crowds during family celebrations.
The American currency had a week of great fluctuation, closing Friday at R＄ 5,28 (+2,13%). The internal scenario was the main driver of the weekly increase, where the formation of the new government's ministerial team brought names that did not please the market. The possible decision not to extend the exemption from federal taxes on fuels could put pressure on inflation, which could impact future decisions by the Central Bank
With the rise in Chicago added to the rise in the dollar, Brazilian soybean prices had a week of appreciation, compared to the previous week.
The week will be shorter in Chicago, due to the “New Year” holiday (02/01), however, attention should be paid to the evolution of planting in Argentina and the development of crops in Brazil, the weather will continue to be closely monitored. The National Institute of Meteorology (Inmet) projects significant rainfall for all of Brazil, with the exception of the south, mainly affecting Rio Grande do Sul. Localized rainfall forecasts in the producing belt of Argentina, mainly the provinces of Córdoba and part of Buenos Aires, may favor the continuity of planting. If these conditions are confirmed, it could offer some relief to the upward pressure on Chicago prices.
The continued relaxation of Covid-19 restrictions by China could be reflected in an increase in demand for oilseeds, reflected in this week's American export figures. On the other hand, the increase in contamination is also increasing, which brings some caution to the market.
Internal factors in Brazil should continue to put pressure on the price of the American currency given the evolution of political movements that directly affect the Brazilian economy. Therefore, the week could be marked by a rise in the dollar.
If this scenario is confirmed, the week could see appreciation in Brazilian prices, with the rise of the dollar and the improvement in expected demand from China prevailing.
The week was marked by the continued slowness of business in the domestic market, reflecting the comfort in stocks acquired until the end of the year. In the external scenario, the market continued to be heated, with Chicago ending the week on a high, worth ＄6,78 dollars per bushel (+1,80%).
According to the Buenos Aires Grains Exchange (BCBA), there was a significant weekly increase of 11,1%, reaching 62,9% of the 7,3 million hectares projected for the 2022/23 harvest. Despite the rains of the last few days, the water situation in the planted area remained deficient, requiring new rains in the short term to sustain productivity potential.
In relation to the 2022/23 harvest in Brazil, planting continued to evolve, according to the National Supply Company (Conab), until 29/12, corn planting reached 85,5% in Brazil. At a national level, crops were in satisfactory development conditions, with widespread rainfall and good volume, with the exception of Rio Grande do Sul, which already presents losses that cannot be reversed.
In relation to Brazilian exports, according to the Secretariat of Foreign Trade (Secex), Brazil exported 5,2 million tons in just 17 working days in December, surpassing the 3,4 million in December 2021. With this number, there were only 400 thousand tons left for Brazil to renew the 2019 record.
The climate in South America will continue to be a very important factor in the evolution of planting. The National Institute of Meteorology (Inmet) projects massive rainfall for all of Brazil, with the exception of Rio Grande do Sul. Localized rainfall forecasts in the Argentine producing belt, mainly the provinces of Córdoba and part of Buenos Aires, could favor the continuation of the planting.
Regarding exports, next month there could be the beginning of demand migration for American corn, as the country has plenty of grain stock to sell. Generally, Brazilian corn harvested in the first harvest is practically aimed at promoting the domestic market, which increases the flow of international commercialization of American cereal.
New developments regarding the easing of Covid-19 restrictions in China, the geopolitical conflict in Ukraine and the impact of the North American winter on wheat crops could impact prices in Chicago. Given this, Brazilian prices may experience a week of appreciation, compared to the previous week.
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