Cepea, September 3 2019 – Soybean prices increased sharply in Brazil in August, due to the US dollar appreciation against Real, the low soybean surplus in Brazil and expectations for higher demand from both the domestic and the international markets. In that scenario, the average prices reached the highest levels in the year, in real terms (IGP-DI from July/19).
Brazilian soybean growers left the spot market, expecting new price rises. These agents are also aware of the reduction in the inventory/consumption ratio this season (2018/19) – which should be the lowest in the last three crops, according to data from the USDA – and the higher costs for inputs, mainly fertilizers, for the 2019/20 crop.
The average US dollar in August, at 4.023 BRL, is 6.4% higher than that from July. However, despite the US dollar appreciation, Brazilian sellers were not trading large soybean batches, aware of the American soybean crop failure. Besides, Brazilian soybean growers prefer to keep the remaining of the 2018/19 crop to trade in the coming months, expecting higher price levels when soybean sowing starts in Brazil.
As for processing plants, many of them seem to have inventories enough for crushing until October. Some of them have already interrupted activities for maintenance, while others should halt crushing in the coming weeks. Some purchasers expect quotes to decrease in the coming weeks, based on the possible commercial agreement between the United States and China.
PRICES – Between July 31 and August 30, the ESALQ/BM&FBovespa soybean Index at Paranaguá increased 14.5%, to 88.52 BRL (21.43 USD) per 60-kilo bag on August 30. The CEPEA/ESALQ Index for Paraná, in turn, rose 13.7%, closing at 82.26 BRL (19.91 USD) per 60-kilo bag. Between July and August, these Indexes increased 7.9% and 6.7%, respectively, averaging 85.08 BRL per bag and 78.74 BRL per bag in August.