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USDA boosts soybean prices in Brazil this week, but June was negative

Posted by Rafael Moro

Image: Pixabay

The quarterly planted area and soybean stocks report, released on Wednesday by the United States Department of Agriculture (USDA), boosted futures contracts in Chicago, a movement followed in the domestic market. The internal movement also gained pace.

The week's rise reduced accumulated losses over the month of June in the Brazilian market. With a lot of volatility in Chicago and the retreat of the dollar, last month was marked by a slow pace in trading.

The 60-kilogram bag at the Port of Paranaguá rose from R$ 151.00 to R$ 165.00 between June 25th and July 1st. But at the beginning of the month, the price was R$ 173.00. In Rio Grande, the behavior was similar, with the bag starting June at R$ 173. This week, the price partially recovered, going from R$ 148.00 to R$ 164.00.

On the Chicago Commodities Exchange (CBOT), the contract with November delivery, the most traded, rose 9.9% in the week, closing yesterday at US$ 13.95 ½. In the month, the position rose 1.91% and in the semester, the increase was 25.8%.

The good performance of Chicago in the month was defined by this week's performance, mainly with the jump taken after the release of the USDA numbers, which indicated area and inventories below expectations. The month had a behavior of ups and downs, typical of the weather market period. In addition to climate projections, the flow of money from funds, doubts about the use of biofuels and concerns about the Chinese strategy to combat the rise in commodities deserved attention and strongly affected prices.

In relation to the USDA, the area planted with soybeans in the United States in 2021 is expected to total 87.6 million acres. If confirmed, the area will be 5% above the total cultivated last year.

The number was below the market's expectation, which was 89.15 million acres. The number repeats the estimate of the planting intention report, released in March by the USDA. In comparison with last year, the area should be equal to or greater in 28 of the 29 producing states in the country.

Quarterly US soybean grain inventories, at June 1, totaled 767 million bushels. The volume stored fell 44% compared to the same period in 2020. The number was below the market's expectation of 795 million bushels.

The exchange rate was also highlighted in the composition of domestic prices in this month of June. Last month, the US currency dropped from R$ 5.223 to R$ 4.972, accumulating a loss of 4.8%. In the semester, the American currency lost 9.2%. This behavior weighed on oilseed prices and took the pace of business. In the week, the increase was 2.2%, contributing to the partial recovery of domestic prices.

By: Dylan Della Pasqua | Safras & Mercado