A delay in planting and lower soybean harvest forecasts in Brazil are supporting quotes

According to the AgRural agency, as of November 23, 74% of the planned area was sown with soybeans in Brazil, which is the lowest figure in the last 8 years and significantly inferior to last year’s 87%.

Planting is delaying excessive rainfall in the southern state of Rio Grande do Sul, while in the central state of Mato Grosso, where 98% of the area is already planted, crop forecasts have again been lowered due to a lack of moisture.

The AgRural agency lowered its MY 2023/24 soybean production forecast from 164.6 to 163.5 million tonnes and may revise estimates again if weather conditions do not improve in the near future.

The agency Safras&Mercado reduced the soybean production forecast from 163.25 to 161.4 million tons, although the sown area will grow by 2.1% from 44.68 to 45.62 million tons, and the average yield may reach 3.55 tons/ha.

Hedgepoint experts lowered their estimate of the soybean harvest in the country by 2.2 million tons to 160.1 million tons.

The intensity of precipitation in the states of Mato Grosso and Goiás has increased, but their amount is not enough for the normal development of crops, so the yield of soybeans will be lower than last year.

Last week, January soybean futures on the Chicago Stock Exchange fell 2.9% to $488.6/t, just 1.8% higher than last month’s level, when the speculative rise in quotations began.

The pace of soybean exports this season is 11% lower than last year, and soybean oil prices in the US fell by 4% after a court decision to cancel the mandatory purchase of biofuel for blending by small refineries. All this eased the speculative pressure on prices.

In Ukraine, soybean prices are rising amid frantic export demand and curbed sales by producers who expect prices to rise to $500/t with delivery to the port, as was the case at the end of the 2022/23 season.

Traders offer USD 420-440/t or UAH 17,300-17,800/t for soybeans delivered to Black Sea or Danube ports, which forces processors to raise prices to UAH 17,000-17,500/t delivered to the factory.

At the end of December, Argentina will increase the supply of soybeans to the world market, and in January, Brazil will start collecting and exporting soybeans, which will increase the pressure on quotations and lead to a decrease in global demand, in particular, for Ukrainian soybeans, which have risen sharply in price.