Highlights from last week for soybeans: worsening of the logistical situation in Brazil; China buying soybeans in the US and rising US interest rates. Therefore, the contract expiring in May/23 ended the week being quoted at U＄ 14,29 per bushel (-3,18%) and the contract expiring in July/23 closed at U＄ 14,07 per bushel ( -3,70%).
Brazil's internal logistics, mainly in relation to transport to ports, have experienced an increase in demand. Consequently, prices reflect this increase due to the inability to increase the supply of road transport. This logistical bottleneck has influenced the fall in soybean prices for producers and delayed shipments to ports.
Furthermore, the main grain transport ports are operating at their maximum capacity, with long queues for loading and unloading ships to transport soybeans. With the difficulty of transporting grains and the drop in prices on the physical market, many producers are opting to store their products, causing warehouses to become overcrowded, which, consequently, increases storage costs for producers.
Faced with Brazilian logistical problems, China, the largest buyer of soybeans in the world, focused its purchases for shipment in April on the United States in March. According to Ruan Sene, market analyst at Grão Direto, American soybeans have been falling in price precisely to remain competitive with Brazilian soybeans, and even though they are still a little more expensive, for the Asian country it is worth paying a little more to have the soybeans shipped. still in April. This short-term demand drain could provide relief for Brazilian ports.
The North American currency had a week of considerable fluctuation, mainly due to macroeconomic data coming from around the world, so the dollar closed the week being quoted at U＄ 5,25 (-0,38%). The Monetary Policy Committee of the Central Bank of the United States (FOMC), in its last meeting, defined the increase in the country's interest rates to contain inflation, raising the levels by 0,25 percentage points, reaching the range of 4,75. 5% to 2%. The country seeks an inflation target of XNUMX% in the long term, however, it has had difficulties due to its still heated economy, as has been shown in job creation data reports. Given this, the market became cautious in its long-term speculative positions, which causes large movements in the short term.
For next week, the market will keep an eye on data on the progress of the harvest, which will be informed by the report from the National Supply Company (CONAB). The harvest is currently 7% behind in relation to the previous harvest. However, with the arrival of autumn, the expectation is that rain will decrease, thus opening up space for the harvest to advance quickly. However, this advance could lead to even more logistical and storage problems, putting downward pressure on prices.
As the start of the 2023/24 harvest in the US approaches, the market will begin to direct more attention to the North American Midwest. On Friday (31/03), the USDA will release updates on soybean planting intention numbers, which will provide guidance for prices in Chicago.
For the dollar, a lot of fluctuation is expected this week, as the market remains suspicious about the solidity of the banking sector, which has proven fragile to the increase in North American interest rates. With this, we can expect a slight increase in the Dollar exchange rate.
Given the scenarios described, there may be a continued drop in soybean prices, both in Chicago and in the Brazilian physical market.
The previous week was marked by continued planting of the 2nd corn crop, renewal of the Black Sea export agreement and increased demand for North American corn. Given this, Chicago prices ended the week at U＄ 6,44 per bushel (+1,42%) for the contract expiring in May/23. The Brazilian physical market had a week of devaluation.
The planting of 2nd harvest corn continues to evolve, even though it is outside the ideal window. According to the National Supply Company (Conab), it reached 85,1% nationally. Among the states, São Paulo is the one with the greatest delay, with only 50% of the planted area, followed by Mato Grosso do Sul, with 63%. If this delay persists until the end of the month, it could result in an increase in the sorghum area to the detriment of corn, due to climate risk factors.
The renewal of the Black Sea export agreement took place, but the agreed deadline is still different between the parties. In this case, Russia's understanding prevails, which defends an extension of 60 days, given that the main Ukrainian ports are occupied by the Russians. Ruan Sene, an analyst at Grão Direto, believes that this scenario results in a very high logistical risk, which could considerably increase the cost of transportation. The current situation involving Russia and Ukraine, added to the limitations of Brazilian corn, have provided great opportunities for North American corn. According to the US Department of Agriculture (USDA), in the last two weeks, the Chinese purchased 2,1 million tons. This demand has been supporting Chicago prices and reinforcing global demand for the cereal.
The climate, according to the National Oceanic and Atmospheric Administration (NOAA), is favorable for the Northern region of Brazil. For the rest of the country, there is an indication of a reduction in rainfall volumes, resulting in some concern, mainly regarding the initial development of crops in some regions, which could be significantly affected.
Demand for North American corn should remain strong, considering that, at this moment, the USA has satisfactory and easily accessible volumes (compared to Ukraine) to negotiate. Brazil should resume its prominence in the second half of the year, with the harvest of the 2nd corn crop.
On Friday (31/03), the USDA will release updates on the 2023/24 corn planting intention numbers in the USA, which may present a decrease in the initially projected area, generating support for Chicago prices. Next month will be marked by the beginning of planting work, sharing the market's attention with Brazil.
Grão Direto's market analyst, Ruan Sene, believes that given the scenario of corn shortages in the domestic market, caused by the slow harvest of 1st harvest corn and the climatic uncertainties surrounding the 2nd harvest, a trend of appreciation in prices could begin of Brazilian corn.
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