Cepea, June 2, 2020 – The dollar depreciation against Real in May weakened the prices paid for soybean and its by-products in the Brazilian market, which reduced liquidity on some days. Many growers have cash flow and, thus, were not interested in lowering asking prices during the month. This scenario widened the gap between asking and bidding prices, which hit 6 Reais/bag in late May.
The American currency decreased by 1.9% between April 30 and May 29, to 5.34 BRL on May 29. However, the monthly average, at 5.6396 BRL, was still 5.8% higher than that in April.
It is worth to mention that, despite the devaluations at the end of the month, the averages for the ESALQ/BM&FBovespa Index in Paranaguá (PR) and the CEPEA/ESALQ Index in Paraná in May were 7.9% and 8.5% higher than that in April, at 110.41 BRL and at 103.34 BRL per 60-kilo bag. These are also monthly records, in nominal terms. In real terms, these are the highest averages since June 2016 (values were deflated by the IGP-DI from April/20).
Between April 30 and May 29, the ESALQ/BM&FBovespa Index in Paranaguá (PR) and the CEPEA/ESALQ Index in Paraná rose by 3.8% and by 3.6%, respectively, closing at 107.51 BRL (20.13 USD) and at 100.40 BRL (18.80 USD) per 60-kilo bag on May 29.
Brazilian soybean growers have already sold record volumes from both the current and the next seasons. According to Imea, until May 11, 89% of the 2019/20 crop in Mato Grosso had been sold, more than the 71.84% marketed in the same period last year. As regards the coming season (2020/21), Imea estimates that 37.25% have been marketed, much more than the 12.35% sold in the same period last year. In the remaining states, more than 80% of the 2019/20 crop has been sold. In SP, more than 90% of the crop has been marketed, according to growers.
In light of the low surplus in Brazil, soybean farmers are opting for saving the remaining batches to trade in the second semester of 2020, since there are uncertainties related to trades between China and the United States.
On the other hand, agents from Brazilian processors have been cautious about new purchases. The dollar devaluation against Real in May drove these agents away from the market, since prices may drop even more. However, the demand for by-products continues high, underpinning processors’ profit margins.