Dollar, higher demand and low surplus push up prices in BR

Cepea, July 2, 2020 – Although the dollar decreased against Real most of June, it remained strong, favoring both the international demand for the Brazilian soybean and liquidity in the domestic market. This scenario added to the low surplus in Brazil pushed up soybean prices in the Brazilian market in June.

 

As most deliveries for June and July had already been scheduled, deals for shipment from August prevailed. The trading pace could have been faster if sellers had not been unwilling to sell batches remaining from the 2019/20 crop, since there may be a lack of soybean in the market in the second semester of 2020. However, as regards the 2020/21 crop, deals hit a record for the period, but a large volume is still available to be marketed.

 

Thus, between May 29 and June 30, the ESALQ/BM&FBovespa Index in Paranaguá (PR) and the CEPEA/ESALQ Index in Paraná rose by 7.2% and 8.9%, respectively, closing at 115.32 BRL (21.20 USD) and at 109.35 BRL (20.10 USD) per 60-kilo bag on June 30.

 

With the low surplus and the uncertainties related to the domestic demand in the second semester of 2020, growers seemed interested in selling new volumes of the 2020/21 crop.

 

INDUSTRY – Higher soybean prices are concerning agents about supply in the second semester – many processors have inventories enough only for the short-term.

 

At the beginning of the covid-19 pandemic in Brazil, in March, agents were not sure about soybean meal and oil consumption. However, both the domestic and the international demands continued firm, mainly for soybean meal. Now, with the dollar still high, processors, mainly from south-eastern Brazil, prefer to export the by-product rather than sell it in the domestic market, reducing supply for Brazilian consumers.

 

On the other hand, in June, the processors in southern Brazil were opting for importing soybean, since prices were high in the domestic market, which limited the price rises for the by-products.

 

(Cepea-Brazil)

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