Quotes drop in Brazil, but record US dollar limits devaluations; liquidity is higher

Cepea, February 4, 2020 – Prices for soybean and its by-products dropped in the Brazilian market in January, due to devaluations at CME Group (Chicago Mercantile Exchange), lower demand in the domestic market, slower exports pace, expectations for a large crop in South America and a progress in the commercial agreement between the United States and China. Besides, the soybean harvesting is advancing in Brazil, and, thus, purchasers were postponing acquisitions, expecting lower prices in February. Purchasing needs from the industry were lower too, since most of them were receiving the product purchased back in 2019.


Still, liquidity increased, due to the interest of many soybean growers in selling the product stocked as well as the beans currently being harvested. This growing interest in sales, in turn, is linked to the current price levels. Despite the recent devaluations, prices are still at record levels, in nominal terms, for this period.


As regards purchasers, many of them are cautious about closing new deals. According to the agents consulted by Cepea, operators from many processors closed term contracts to receive the product between January and February 2020 and prefer to wait for the harvesting to advance in order to purchase new batches. These agents expect quotes to drop, based on the estimates for a record crop in Brazil this season.


Price drops were limited by the US dollar appreciation against Real – on January 31, the American currency hit the highest nominal level since the beginning of Plano Real, in 1994, at 4.283 BRL, a staggering 6.6% up compared to that on December 30. As a result, the gap between bidding and asking prices widened, reducing the number of deals closed in the spot market.


Between December 30 and January 31, the ESALQ/BM&FBovespa Index in Paranaguá and the CEPEA/ESALQ Index in Paraná decreased 2.9%, closing at 85.33 BRL (19.92 USD) and at 80.36 BRL (18.76 USD) per 60-kilo bag on January 31.


FIELD – In Mato Grosso, the harvesting pace was fast in January. Data from Imea indicate that 14.4% of the area had been harvested until January 24, less than the 25.6% harvested in the same period last year.


In Paraná, the harvesting pace was slower, due to the late sowing and rains delay. According to Deral/Seab, only 2% of the state area had been harvested until Jan. 27, and Cepea collaborators indicate that the harvesting pace should step up in the second fortnight of February.


In Minas Gerais, heavy rains have been a concern, but growers from that state have reported that precipitation is located and should not damage crops. In Santa Catarina and in Rio Grande do Sul, on the other hand, the low rain volume is a concern – it rained in these areas in late January, but the agents consulted by Cepea reported that the volume is still lower than the ideal.






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