With dollar drops, sellers leave the market; prices decrease in Brazil

Cepea, July 18 2019 – Liquidity was low in the Brazilian soybean market in the first fortnight of July, where prices were weakened. Sellers were focused on accomplishing contracts, which were closed at high price levels, and did not seem interested in closing new deals. It is worth to mention that a large volume of the 2018/19 crop has already been traded. US dollar drops also drove sellers away from the market, making remuneration in the Brazilian market more appealing than that from the international market.

 

According to a report from Imea/MT, until early July, 84% of the 2018/19 crop from Mato Grosso had been traded, 2.27 percentage points below that in the same period last year. Concerning the 2019/20 crop, around 23.23% have been marketed, 2.21 p.p. more than that in the same period last year. In Paraná, according to Cepea collaborators, around 75% of the crop has been sold.

 

In that scenario, the ESALQ/BM&FBovespa soybean Index at Paranaguá dropped 3.3% between June 28 and July 15, to 79.06 BRL (21.04 USD) per 60-kilo bag on July 15. In the same comparison, the CEPEA/ESALQ Index for Paraná decreased 2.1%, to 74.12 BRL (19.73 USD) per 60-kilo bag. The US dollar, in turn, dropped 2% in that period, to 3.76 BRL on July 15.

 

SUPPLY AND DEMAND – In a report released on July 11, the USDA estimated that the global soybean supply should reach 347 million tons in the 2019/20 crop, 2.35% less than that estimated in June and 4.36% less than that in the previous season. This reduction is linked to expectations for lower production in the United States, due to weather issues during soybean sowing. Estimates for the American output were revised down by 7.35% compared to that released in June, totaling 104.64 million tons – this volume is 15.4% smaller than that from the 2018/19 crop.

 

For the Brazilian output, estimates were kept at 123 million tons, and of this total, 75 million tons should be exported. Concerning production in Argentina, it is still estimated at 53 million tons.

 

According to the USDA, 308.1 million tons of soybean should be crushed worldwide, 2.15% more than in the 2018/19 crop. Global soybean trades, in turn, are forecast at 151.05 million tons, 0.9% higher than that last season. Imports from China were kept at only 87 million tons, 2.35% less than in the 2018/19 crop. Soybean ending stocks (by Sept/19) were revised down by 7.22%, to 104.5 million tons.

 

In Brazil, Conab (National Company for Food Supply) revised up the output from the 2018/19 crop to 115 million tons, 0.15% higher than that reported in June, but 3.57% lower than that from 2017/18, and the second largest in all times.

 

Soybean consumption in the Brazilian market in the 2018/19 season was kept at 45.2 million tons. Ending stocks by December/19 were revised up by 5.49%, to 3.36 million tons.

 

(Cepea-Brazil)

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