BNDES launches more competitive rural credit in dollars for Brazil's agro-export sector
Credit potential is expected to exceed R$2 billion per year; From May onwards, rural producers will have another alternative at BNDES for financing
The past week was marked by the update of supply and demand figures, a reduction in production estimates in Argentina and China's announcement about a reduction in soybean meal consumption. Therefore, the contract expiring in May/23 ended the week being quoted at U$ 14,99 per bushel (+0,47%) and the contract expiring in July/23 closed at U$ 14,67 per bushel ( +0,34%). Furthermore, for the dollar, inflation data was released in several countries, resulting in a drop of 2,57% (R$4,93).
On April 11, 2023, the United States Department of Agriculture (USDA) published the Global Supply and Demand Report (WASDE), presenting numbers that surprised the market. The expectation was for a reduction in North American and global soybean stocks, but the numbers presented by the USDA showed a maintenance of North American stocks and an increase of 0,28 million tons in global stocks. Furthermore, the report pointed to an increase of 1 million tons in soybean production in Brazil, which contributed to the increase in Brazilian stocks.
In the neighboring country, Argentina, the Rosário stock exchange announced another reduction in soybean production of more than 4 million tons, leaving estimates at 23 million tons. Current production does not have acceptable quality for commercialization and Argentina will not be able to operate at its maximum capacity as the largest exporter of soybean meal in the world until the next harvest.
China, our largest trading partner for soybean meal, plans to reduce the use of this product in animal feed by 2025. The objective is to reduce dependence on the North American grain and avoid geopolitical issues. Currently, the proportion of soybean meal in animal feed in China is 14,5%, and the government wants to reduce it to less than 13,5%. This reduction could result in a decrease of around 3 million tons in the volume of soybean meal imports by China.
In relation to the dollar, during the previous week, important data on inflation in Brazil, China and the United States of America were released. The three countries came with inflation numbers below expectations, and especially the North American data caused the market to speculate on a possible reduction in interest rates at the next central bank meetings. As a result, the US currency closed down 2,57%, worth R$4,93. Given these facts, the physical market for Brazilian soybeans suffered slight declines due to the fall in the dollar and export premiums.
This week, the market will continue to keep an eye on the North American climate, in which temperatures will remain low in producing regions, and along with this, precipitation forecasts are beginning to emerge. On Monday (17/04), the USDA brings the planting progress report, and it may be that planting of the oilseed plant will begin, as planting conditions related to climate and soil are improving.
New news coming from China, regarding the consumption of soybeans and their derivatives, could impact fluctuations in Chicago. Demand is expected to remain weak, negatively impacting export premiums.
For the dollar, the market will keep an eye on the next Central Bank meetings regarding interest rate definitions, due to inflation data having retreated. Furthermore, on Monday (17/04) we will have Chinese GDP data that could change market expectations in relation to global demand.
Given this scenario, Ruan Sene, market analyst at Grão Direto, states that the dollar could maintain its downward trend, and as a consequence, it should continue to put downward pressure on Brazilian soybean prices.
The previous week was marked by several events, such as: the evolution of North American planting, an increase in exports, pressure on the supply of corn from the second Brazilian harvest and a reduction in production expectations in Argentina. Given this, Chicago prices ended the week on a high, being quoted at U$ 6,68 a bushel (+3,89%) for the contract expiring in May/23. However, the Brazilian physical market had a week of devaluation.
The market continues to pay attention to the planting and development of corn crops in the 2023/24 harvest in the United States. According to the US Department of Agriculture (USDA), Texas is the most advanced state in planting, with 61% of the area already planted, followed by North Carolina, with 12%. The largest producing states: Iowa, Illinois and Nebraska, have not yet started planting significantly.
Still on the United States, exports to China resumed this week. According to the USDA, the Asian country purchased 708 thousand tons, with around 60% of this volume referring to the current harvest, and the remainder to the 2023/24 harvest, which is in progress.
In Brazil, the evolution of the 2nd harvest continues without widespread problems. According to the National Supply Company, planting is technically completed, with 98,9% of the projected area completed. Crops that were planted outside the ideal window began to be impacted by the water deficit, in the Northwest of Minas Gerais and Tocantins. Most of the crops in Mato Grosso, Goiás and Minas Gerais are in the flowering phase, where the lack of rain generates significant impacts on production.
The market will continue to pay attention to weather conditions ahead of the development of the second corn harvest in Brazil. According to information from the National Oceanic and Atmospheric Administration (NOAA), significant rainfall is forecast for all of Brazil, with the exception of the Northeast and part of the Midwest. The lack of rain could have significant impacts on crops in these regions, especially those planted outside the ideal window.
For the USA, there are forecasts of rain in most of the producing regions. However, temperatures will remain low, making it difficult to start planting in the central region of the North American production belt.
The demand for corn produced in the United States should remain high, as there is a sufficient and affordable supply to be traded. At this moment, the United States has a comparative advantage in relation to other important corn producers, such as Ukraine and Brazil, which face logistical difficulties in distributing the product.
The satisfactory development of corn crops has been putting strong downward pressure on Brazilian prices. Given this scenario, the week could be marked by continued decline.
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Credit potential is expected to exceed R$2 billion per year; From May onwards, rural producers will have another alternative at BNDES for financing
During five days of exhibition, rural producers and agricultural professionals from Brazil and abroad will follow the launches of industries and companies in Rio Grande do Sul, which contribute to increasing the productivity of rural properties of all sizes