Soybean prices registered a new, however, small average increase in Brazil, according to the weekly analysis by the International Center for Economic Analysis and Agricultural Market Studies (Ceema). In Rio Grande do Sul this average closed the week at R$ 121.58/bag, however, the main local markets maintained the value of R$ 119.00/bag. In other regions of the country, soybean prices fluctuated between R$107.00 and R$114.00/bag.
The decline in the exchange rate, which reached R$ 5.12 at some points during the week, to rise to R$ 5.16 on Thursday (25), the maintenance of stable prices in Chicago, with a downward bias during the week, were tempered by the good improvement in premiums in national ports.
Our country, faced with better premiums, increases its soybean exports in April. According to Secex, in April alone, Brazilian sales already reached 10.2 million tons by 04/22, compared to just over 14.3 million in the entire month of April 2023. In the year to date, the Brazilian exports total 32.3 million tons, surpassing the 30.5 million in the same period in 2023. This is a historic record for the period, according to Brandalizze Consulting. With China more present in the Brazilian market, soybean premiums should remain firm in the coming weeks, supporting domestic grain prices. This reality also demonstrates that the competitiveness of Brazilian soybeans, at the moment, remains better than that of the US product. In other words, our product is around 4% cheaper in FOB port offers, compared to the USA, remembering that the North American country practically does not have much soy to export at the moment, especially for logistics reasons. Given the reality of internal costs and prices, there is room for an increase of 6% in FOB values. Remembering that “for every 10 prize points, with the dollar around R$5.00, it is the equivalent of something like R$1.10 to R$1.15 per bag. So, if the premium increased by 30 points, this is equivalent to almost R$3.30 in premium just on the premiums.” (cf. Patria Agribusiness)
On the other hand, domestic demand appears to be beginning a strengthening process, however, domestic margins are poor. Perhaps the situation will improve in the second half of the year. In this sense, it appears that “withdrawals from biodiesel contracts are very slow, putting pressure on margins and also on processing. There are reports that a processor in Mato Grosso is operating at 50% of its capacity because the tanks are full. If this situation is general, processing will begin to fall, which could begin to reduce the supply of bran on the market.” Remembering that the 14% blend of biodiesel in petroleum diesel has been in effect since March 1st here in the country, according to with Pátria Agribusiness.
Thus, the devaluation of the Real, combined with the improvement in premiums, allowed prices to rise to their current levels in recent months, accumulating a gain of more than R$10.00/bag in a period of 45 days. Obviously, not all the gains that companies make in the port are passed on to producers in the interior, however, there is a part of these gains that reaches them.
That said, it is worth noting that exports are still slow this year. Considering a harvest of around 148 million tons, around 72 million have already been committed to export. The “normal” for this time would be a volume slightly above 85 million. Furthermore, soon we should see sales pressure from Brazilian producers, given the bank commitments that are beginning to expire. This could stop the upward movement in internal prices. Finally, the harvest of the current Brazilian soybean crop would have reached 89.2% of the area on 04/19, against 91.1% in the historical average for that date, according to Pátria Agronegócio. In Rio Grande do Sul, according to Emater, the harvest reached 66% of the area on 04/25, against 73% in the historical average for this date. And in Paraná, Deral indicated that the local harvest will be even smaller than expected, expected to reach 18.3 million tons, with all of it already being harvested. This represents 16% less than initially expected.
Anec predicts that Brazil will export 13.5 million tons of soy this April. In terms of bran, shipments would reach 2.44 million tons, with a reduction of 130,000 tons compared to the previous week’s estimate.
