Soybean prices may fluctuate more with the effects of the weather on the new US harvest | Agriculture

The focus of investors operating in the soybean market should now turn to the United States, which will begin planting the 2024/25 harvest at the end of April. At this time, the climate market, as the period of crop development is known, could cause more pronounced fluctuations in soybean prices, as occurred in 2023, analyst Ana Luiza Lodi, from StoneX, assessed in a report.

“If there is any climate threat, oilseed prices may experience peaks, in addition to causing greater volatility,” said the analyst in a report.

Planting intention data released last week by the US Department of Agriculture (USDA) indicates that the soybean planted area in the country will grow from 33.8 million hectares to 35 million hectares. Even with falling prices, soybeans declined less than corn, which would encourage American producers to invest more in the oilseed, according to StoneX. However, this number could still change, taking into account that American producers prefer to plant corn over soybeans.

In the first quarter, soybean prices maintained a downward trend, in a global context of production exceeding consumption by approximately 15 million tons. The continuous soybean contract on the Chicago Stock Exchange has registered a drop of 7.8% since the beginning of the year, closing March at US$ 11.91 per bushel.

Brazil suffered losses from the weather, but will still have a robust harvest. StoneX estimates the Brazilian soybean harvest at 150.8 million tons.

Argentina’s harvest is showing a broad recovery and should be around 50 million tons.

On the demand side, there are concerns about the still slow growth in consumption in China, which replenished stocks last year with Brazilian products. There is a prospect that China will continue to limit imports from the US, while seeking Brazilian soybeans.

In the Brazilian market, the consumption outlook is positive, with the mixture of biodiesel in diesel increasing from 12% to 14% since the beginning of March.

According to StoneX estimates, the consumption of soybean oil for biodiesel is expected to grow by around 27% in 2024, exceeding 7.3 million tons, which tends to support the commodity in the domestic market.

The weather in the coming weeks will be decisive in defining the size of the winter corn harvest in the country, in the opinion of analyst Ana Luiza Lodi, from StoneX. Weather forecasts indicating that April may be drier than normal indicate that there may be a change in the size of the harvest, the analyst said in a report.

StoneX expects production for the second 2023/24 harvest to reach 96.1 million tons, compared to 108.4 million in the last harvest, a drop of 11.3%.

In the first quarter, corn prices maintained the downward trend registered last year, thanks to the combination of supply without major threats and slowdown in consumption. Continuous contracting in Chicago has fallen 6.2% since the beginning of the year. On B3, the corn contract fell 15%, closing March at R$60.30 per bag.

Lodi cited the new crop in the USA, which begins to be planted in April, as another point of attention. The intention for planted area in the country is 36.44 million hectares, but this number may be revised due to possible impacts of the La Niña phenomenon, which makes the climate drier.

Excluding climate risk, the expectation is for consumption to slow down and global production to be robust, without major risks. The continuous contract in Chicago has recorded losses of 6.2% since the beginning of the year, while corn on B3 accumulated a decline of 15%, ending March at R$60.30 per bag.

The 2023/24 American harvest ended with record production of 389.7 million tons. Ukrainian production was close to 30 million tons, while estimates for Argentina are for a harvest of 55 million tons. China, the world’s second largest corn producer, also harvested a very favorable harvest, according to the analyst.

Worldwide, according to the US Department of Agriculture (USDA), global corn production is expected to be 18 million tons above consumption, with global stocks rising to 319.6 million tons.

Consumption in China is on the radar, given concerns about the use of corn for feed. The pork sector faced oversupply in 2023. The country has also improved the productivity of its corn crops with the introduction of GMOs.

In the USA, the outlook is for consumption to advance more slowly than production.