Porto Alegre, July 11, 2023 – The soybean trading pace for the 2022/23 Brazilian crop gained strength in June and the first days of July, after a slow May.
Internal prices have shown an important reaction in the last five weeks, supported mainly by the strong appreciation of CBOT futures contracts in June. The spot position (July/23) ended the month with an appreciation of 19%, reflecting the consecutive worsening in the conditions of US crops registered since the beginning of the month in the face of irregular weather that hit the US growing belt. This fact led the market to speculate about probable cuts in the estimates of the US yield, production and stocks in the next monthly USDA report, which will be released on July 12. This speculation gained even more strength after USDA brought a totally unexpected cut in the US soybean acreage in its traditional report, released on June 30. Cutting 4 mln acres reduced the US productive potential by at least 5 mln tons, even considering a record yield. As the trend is also for a reduction in the estimated average yield, the trend is that the cut in the US productive potential exceeds 6 mln tons, which would take the output to around 116 mln tons or less.
This appreciation of Chicago created a positive environment for domestic prices, which only failed to rise further due to the decline in the exchange rate.
Faced with this, Brazilian producers are once again interested in the market, showing a greater appetite for new negotiations with the physical crop, boosting the selling pace. Yet, the pace remains below the five-year average.
As for the new Brazilian crop (2023/24), producers keep showing little interest, which maintains the alert signal due to the accumulated delay.
According to a survey carried out by SAFRAS & Mercado, with data collected up to July 7, 66.1% of the 2022/23 Brazilian soybean crop were sold, up 9.4% from the previous month (56.7%). The current percentage is equivalent to approximately 102.956 mln tons traded, out of a crop currently estimated at 155.656 mln tons. In the same period last year, the index was 74.3%, while the five-year average for the period is 79.0%.
For the new Brazilian soybean crop (2023/24), the data point to a theoretical percentage sold of only 11.1% of a still hypothetical figure for production (based on the 2022/23 crop), with an increase of 2% over the previous month (8.1%). In the same period last year, the percentage was 15.7%. The five-year average for the period is 21.4%. For the current calculation, we used the basis of the 2022/23 crop, as the first estimate by SAFRAS & Mercado for the new crop (2023/24) will be released on July 14, in its traditional planting intention report.
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