Cepea, March 3, 2020 – The harvesting of a possible record crop is advancing in Brazil, but prices continue firm in the domestic market. In February, soybean growers were accomplishing contracts and, thus, were not closing new deals. This scenario added to the US dollar appreciation against Real and the decision of Argentina’s government to suspend new agricultural exports underpinned quotes in the Brazilian market last month.
Between January 31 and February 28, the ESALQ/BM&FBovespa Index in Paranaguá and the CEPEA/ESALQ Index in Paraná increased 5.3% and 3.1%, respectively, closing at 89.86 BRL (20.00 USD) per 60-kilo bag and at 82.91 BRL (18.46 USD) per 60-kilo bag on February 27. The US dollar, in turn, rose 4.8% in February and a staggering 11.8% in 2020, closing at 4.49 BRL on February 28.
The decision of Argentina’s government, in turn, tends to underpin quotes in Brazil, since international soybean purchasers may look for the product – and its by-products – in the Brazilian and the American markets. It is worth to mention that Argentina is the top soy oil and meal exporter in the world.
Agents believe that the suspension of new agricultural exports aims to prevent new deals from being closed before the possible announcement of higher tariffs on these sales. Currently, Argentina’s tariffs (or “retenciones”) are at 30%, and agents believe they may increase to 33%. Higher tariffs should reduce the competitiveness and income of soybean growers in Argentina. The Buenos Aires Stock Exchange (Bolsa de Cereales) estimates supply to total 54.5 million tons this season, against 53 million tons in the previous crop.
HARVESTING – According to Deral/Seab, around ¼ of the crops from Paraná have been harvested. In Mato Grosso, activities have reached 2/3 of the crops. In both states, the harvesting pace is slower than it was in 2019 – it is worth to mention that, last year, the harvesting pace was faster, since sowing took place earlier and the weather was favorable at the end of crops cycle. In Mato Grosso do Sul, the harvesting has reached from 15 to 20% of the soybean area. In Rio Grande do Sul, according to Emater, 1% of the crops have been harvested.
INTERNATIONAL MARKET – In the international market, the first estimates for the 2020/21 crop point to an increase in the area allocated to soybean.
USDA – According to data from the USDA released on February 20, the area sown with soybean in the 2020/21 world season should increase 11.7%, totaling 34.4 million hectares, 3.6 million hectares larger than that in the previous season.