High demand and impaired logistics in Argentina push up prices in Brazil

Cepea, April 2, 2020 – Firm demand from both the Brazilian and the international markets, futures valuations at CME Group (Chicago Mercantile Exchange) and the strong US dollar pushed up soybean prices in Brazil in March. Besides, in an attempt to fight the coronavirus outbreak, the Argentinean government reduced activities at ports, which may favor the Brazilian exports of soybean and its by-products.

 

In Argentina, soybean harvesting started late in the month, reaching, on March 26, 4.6% of the area sown, according to the Buenos Aires Stock Exchange. Until the end of the month, productivity was lower than that in the previous season, and Bolsa de Cereales pointed to a possible reduction in the production estimates, currently at 52 million tons.

 

In Brazil, the productivity of the areas already harvested is good in the central-western and southeastern regions, as well as in Paraná (southern BR), while in Rio Grande do Sul (RS), Santa Catarina (SC), Bahia (BA) and Maranhão (MA), production may be lower this season, because of the unfavorable weather.

 

In SC and in RS, low rains damaged the crops that are currently in the maturation stage. According to Emater, 39% of the soybean areas in RS had been harvested until March 26, more than the average of the last five years, of 28%. In BA and in MA, high rains were damaging crops – in these states, the harvesting is still beginning.

 

The ESALQ/BM&FBovespa Index in Paranaguá rose a staggering 12.6% between February 28 and March 31, closing at 101.21 BRL (19.48 USD) per 60-kilo bag on March 31, the highest nominal level in all Cepea series, which started in March/2006 for this product. On March 31, the CEPEA/ESALQ Index in Paraná hit the highest nominal level in all Cepea series, at 93.48 BRL (18.06 USD) per 60-kilo bag, a staggering 13.2% higher than that on February 28.

 

Brazilian processors are increasing the competition with foreigner purchasers for soybean. Thus, it seems that part of the agents from these processors will continue to increase by-products prices, since the demand for soybean meal and oil is firm – and may increase even more, due to the scenario in Argentina.

 

(Cepea-Brazil)

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