Low supply and firm demand underpin quotes in 2019

Cepea, January 7, 2020 – The decrease in productivity and the firm international demand sustained prices in Brazil in 2019. The 2018/19 season was planted at a fast pace and the low volume of rains in late 2018 favored harvesting activities. However, low rains affected productivity, reducing supply in 2019 compared to that in the year before. According to Conab (National Company for Food Supply), the Brazilian production is likely to hit 115.03 million tons, 3.5% down compared to that forecast at the beginning of the crop.


In general, sellers were precautious regarding trades throughout the year. Shipments were firm because China increased purchases from Brazil, and the domestic demand for crushing activities was high too.


In the United States, frequent rains hampered sowing of the 2019/20 crop, refraining producers in Brazil even more from trades. Freight increases observed in the third quarter of the year also discouraged some producers to trade soybean – demand was higher for corn transportation.


From September onwards, the 2019/20 crop failure in the US was confirmed, and at the same time, the lack of rains was already concerning growers in Brazil, who remained refrained from trades.


PRICES – In 2019, the ESALQ/BM&FBovespa Index for soybean in Paranaguá and the CEPEA/ESALQ Index for soybean in Paraná dropped 2.7% and 2.2%, respectively, averaging 82.17 BRL/bag and at 76.79 BRL/bag.


This scenario favored Brazilian exports. In 2019 (from January to December 20), Brazil shipped 76.34 million tons, 8.7% below the volume exported in 2018 (83.6 million tons), according to Secex.


Concerning soybean meal, Brazil shipped 16.21 million tons in the partial of 2019, 3.9% below that registered in the year before (16.86 million tons), according to Secex. Soybean oil exports totaled 988.37 thousand tons, downing 26.4% in relation to 2018.





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