Large soybean global supply weighs on Chicago, but necessity holds domestic prices

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Porto Alegre, March 5, 2024 – Despite external pressure, soybean prices in Brazil did not fall at the same rate as futures contracts in Chicago in February. Given the buyers’ needs, producers held supply and managed to negotiate better during peak periods. Apparently, sellers have already agreed with the prices charged and sales gained momentum.

A 60-kilogram bag opened the month at BRL 120.00 in Passo Fundo (RS) and closed at BRL 114.00. In Cascavel (PR), prices rose from BRL 107.00 to BRL 108.00, and in Rondonópolis (MT), from BRL 103.50 to BRL 105.00 in the period.

In the port of Paranaguá, the bag fell from BRL 117.00 to BRL 116.00. Export premiums remain negative but have improved due to the presence, albeit occasional, of China on the buying side. There was an improvement in activity at ports for shipments between April and June.

On the Chicago Board of Trade (CBOT), contracts expiring in May had an accumulated devaluation of 7.46%, closing February at USD 11.4075 per bushel. Even with some technical correction movements in February, the balance was extremely negative, with prices feeling the pressure exerted by the fundamental scenario.

Climate problems reduced the Brazilian output but not enough to result in external recovery. The Brazilian crop is estimated at 149 mln tons by Safras & Mercado, against initial indications of more than 160 mln tons.

On the other hand, after being severely harmed by the weather last year, Argentine production recovered in the current season. After the production of 20 mln tons in 2023, this year the expectation is that over 50 mln tons will enter the market.

Completing the negative fundamental scenario, demand is increasingly scarce in the United States. And the signs for the 2024 season point to an increase in area, production and stocks, keeping global supply very high.

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