Porto Alegre, March 5th, 2025 – The physical market has shown a price distortion due to several factors. The first was the reflection of the delay of almost two weeks in the Brazilian crop, which caused logistical problems related to ports. Now, it is no longer a question of a shortage of product for shipment, but rather of the delay in fulfilling contracts and the buyers’ need to get soybeans in the short term, albeit in small volumes.
For this reason, we have observed great business opportunities, be it through the port (with just a few indications over the month), or mainly the industry and cooperatives, which are presenting bids well above what was expected considering export parity. This is because the port is not directly influencing domestic prices, but rather indirectly.
We saw strong industry offers and very positive premiums for March in February. However, this situation is already changing and should be completely reversed in the coming few days, as shipping flows are normalizing, as indicated by the February and March line-up, with large volumes expected to be shipped.
Historically, in the same period last year, prices were at least BRL 20.00 below current levels in the spot market, and there was much less supply expected for the first half of the year. In other words, there is a complete distortion from the real situation of the crop in Brazil, but this is a very short-term scenario and practically impossible to sustain.
From now on, we should see a large negative flow in prices, either due to the CBOT in free fall or, mainly, the strong trend of devaluation of port premiums, which could plummet by -50 to -80 points, or even more, depending on the movements in Chicago and the exchange rate. Therefore, it is important to close deals at current levels, as margins may be under significant pressure in the first half of 2025.
The USDA Forum did not have a significant impact on Chicago at this time. The area cut disclosed is not the official projection but just a preliminary estimate. Planting intentions will be officially announced at the end of March, making these data only an initial guideline. Even so, the market’s focus is on the start of the South American crop, the speed of the harvest progress in Brazil, and good rain in Argentina. Therefore, the CBOT does not have bullish fundamental support.
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