The soybean market has entered an adjustment phase following recent gains, with strong volatility observed on the exchanges. The environment remains highly speculative, particularly regarding expectations for domestic demand in the United States.
In the context of China-U.S. trade relations, the week began with sharp declines in grain prices, hitting the daily down limit on Monday. The movement was triggered by statements from President Donald Trump about the possibility of postponing a meeting with the Chinese president.
This scenario unfolds amid ongoing tensions in the Strait of Hormuz, which continue to add uncertainty to the global market and reinforce the speculative bias in trading.
The central point appears to be the U.S. effort to pressure China to take a position and cooperate in reopening the strait. However, the absence of a clear statement from the Chinese contributed to raising risk perception. As a result, this set of factors led funds to reduce part of their positions, generating a corrective movement and a reversal of recent gains, especially after a period of strong concentration of buying in futures contracts.
The market is beginning to position itself for the new U.S. grain crop. At the end of March, on the 30th, the planted area intentions report in the United States will be released. The expectation is for an increase in soybean area and a reduction in corn area, reflecting the current price ratio scenario and the high fertilizer costs, especially for corn, at a still relevant time for input purchases.
Thus, the bias is for soybean area expansion. However, the central point remains Chinese demand. On the one hand, it is likely that crushing in the U.S. will remain strong, driven by the increase in mandatory blending under biofuel mandates. On the other hand, a larger area may result in a significant increase in production. If exports do not keep pace with this growth, U.S. stocks may remain at high levels, similar to those seen in the current crop, which already shows historically high volumes.
In Brazil, the market is experiencing a moment of greater supply, with the harvest already surpassing 60% of the area. Even so, outflow remains slower, with relevant logistical challenges such as truck shortages and rising diesel costs. In addition, current prices are not sufficiently attractive to producers.
Although fertilizer costs have less immediate impact in Brazil at this moment, price ratios remain unfavorable. If this scenario persists, there is a risk of area reduction or reduced investment in technology in the next crop, although it is still too early for more definitive conclusions, the point deserves attention.
In the macroeconomic field, this week brought the first 0.25 percentage point cut in the Selic rate in Brazil, while the Federal Reserve chose to keep the interest rate unchanged in the United States. As a result, and despite volatility, the dollar gained some momentum.
From now on, the market should monitor more closely the next moves of Brazil’s Central Bank. If further cuts materialize, the interest rate differential may pressure the exchange rate upward. Added to this is the continuous increase in Brazil’s public debt, which raises risk perception. In this context, a stronger dollar throughout the year, or at least with greater upward volatility, remains a plausible scenario.
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