Cepea, May 16, 2018 – The domestic and international soybean prices dropped in the first fortnight of May, pressed down by both expectations for larger inventories than expected in Brazil and better weather conditions in the United States, which have allowed sowing to advance. Besides, Brazilian quotes were influenced by weakened international demand, since national ports are full.
At Santos (SP) port, the main exportations route for the Brazilian soybean, flow is faster than at other ports, allowing trades to be closed in the spot market. At Paranaguá (PR) port, however, larger batches are only traded for delivery from June onward, and at São Francisco (SC) port, from July/18 onward, reducing liquidity in Brazil.
In light of that, growers have started to supply larger batches from the 2018/19 crop, with delivery scheduled between February and March, at 83 BRL and 84 BRL per 60-kilo bag, which are still very attractive values.
Despite better weather conditions, the area to be sown with soybean in the 2018/19 season should be smaller in the United States. In the first estimates for the new season, the USDA reduced the American production by 2.5%, to 116.48 million tons. That was due to smaller area, which shrank from 36.2 million hectares to 35.7 million hectares. If estimates are confirmed, in the 2018/19 season, Brazil should produce more than the USA, becoming the biggest soybean-producing country in the world, with 117 million tons. Thus, despite lower supply from the United States, global production may reach a new record, at 354.5 million tons, according to the USDA.
For the 2017/18 season, the USDA has revised up the global soybean output to 336.7 million tons, volume 0.6% larger than that forecast in April, but 3.9% smaller than the previous season, due to crop failure in Argentina. That was due to larger output in Brazil, which, according to the USDA, is forecast at 117 million tons in the current season – a new record. As for exportations, Brazil should ship 73.3 million tons of soybean, 16.1% higher than the amount exported last season.
Regarding by-products, the USDA has revised up soy meal supply to 235.3 million tons in the 2017/18 season, in light of higher crushing in the United States and the European Union. Still, Argentina continues to be the main soy meal exporting-country in the world, with 29 million tons, followed by Brazil (15.6 million tons) and the United States (11.5 million tons).
Similar to the USDA, Conab (National Company for Food Supply) indicates the Brazilian production at 117 million tons in the 2017/18 season, volume 2.6% larger than the previous crop. Thus, ending stocks were revised up to 2.6 million tons in December/18, 3.8% more than that forecast in April and 62.1% larger than that in the 2016/17 crop.
PRICES – Between April 30 and May 15, the ESALQ/BM&FBovespa soybean Index at Paranaguá dropped 0.9%, to 85.99 BRL (23.48 USD) per 60-kilo bag on May 15. In the same period, the CEPEA/ESALQ Index for Paraná decreased 1%, to 80.42 BRL (21.96 USD) per 60-kilo bag on May 15. Dollar rose 4.4% in that period, to 3.662 BRL on May 15, the highest level since Apr/16, at 3.689 BRL.