Cepea, December 5, 2019 – Rains in late November favored soybean sowing in many Brazilian regions, and activities ended in Mato Grosso and Paraná States. The late beginning for soybean sowing, however, should slightly delay the harvesting and, consequently, sowing of the second crop, mainly for corn. Despite this scenario and the international devaluations, prices continued to increase in Brazil.
The boost came from sellers’ retraction – Brazilian soybean growers expect prices to keep on the rise until, at least, the first quarter of 2020, based on the possible delay of the 2019/20 crop. Besides, uncertainties about the commercial agreement between the United States and China resulted in higher premiums and prices in Brazil, since this scenario favors national exports. It is worth to mention that China is the number one soybean-consuming country and destination for 77% of the Brazilian soybean exports in 2019 (until October).
Price rises in Brazil were also linked to the sharp US dollar appreciation against Real, which tends to attract importers to Brazil. In November, the US dollar averaged 4.154 BRL, the highest since the beginning of the Plano Real (1994), in nominal terms.
On November 29, the ESALQ/BM&FBovespa soybean Index at Paranaguá closed at 90.06 BRL (21.27 USD) per bag, 3.1% up compared to that on Oct. 31. The CEPEA/ESALQ Index for Paraná, in turn, closed at 84.88 BRL (20.04 USD) per 60-kilo bag, 3.3% up in the same comparison. The averages of the ESALQ/BM&FBovespa soybean Index at Paranaguá and the CEPEA/ESALQ Index for Paraná closed at 89.86 BRL per 60-kilo bag and at 84.25 BRL/bag, respectively, the highest since Oct/18, in real terms (IGP-DI from Oct/19).
In the over-the-counter market (paid to farmers) prices increased 1.5% in the month, and in the wholesale market, 2.1%, on the average of the regions surveyed by Cepea.
SOY OIL – Prices for crude degummed soybean oil (with 12% ICMS) rose sharply in the Brazilian market in November, having reached 3,646.97 BRL per ton in São Paulo city on Nov. 29, the highest nominal level in all Cepea series, which started in July 1998 for this product. This increase was linked to the low availability of soy oil at processing plants during the month, when demand was really high in the Brazilian market.
In general, the upward trend of soy oil quotes has been observed since August/19, when news started to point to an increase in the minimum amount required in the mix of biodiesel to diesel oil – from 10% (B10) to 11% (B11), starting September 1st, 2019. Since then, liquidity has increased sharply in the Brazilian market of soy oil, since this product accounts for 70% of the raw-material used in biodiesel production.
Soy oil prices averaged 3,454.57 BRL per ton in November, 4.9% up compared to that from October and the highest since December 2016, in real terms – the monthly averages were deflated by the IGP-DI from Oct/19.