Brazil: Physical soybean market has a week with lower turnover and falling prices

In a shorter week with just a few trades, soybean prices in the domestic market ranged from stable to lower. Despite the appreciation of futures contracts in Chicago, the fall of the dollar against the real predominated in the definition of domestic prices, driving traders away from the market.

The positive impact of Chicago on the Brazilian market was offset by the exchange rate oscillation. The US currency accumulated a fall of 1.93% in the week ended Thursday, the 24th. The flow of external resources, driven by the migration of capital from the United States to other countries, put downward pressure on the US currency.

Now, the market’s attention turns to the US soybean planting, which has performed well so far. The big question is the size of the cut in the area to be cultivated and the impact of this reduction on price formation. There is a possibility of a larger cut than suggested by the planting intention report, which may attract more attention from the market in the short term, since the recent climate and medium- and long-term forecasts are very favorable for crop development. More satisfactory progress is expected in the coming few weeks.

In the domestic market, the business pace has slowed down recently, especially due to the decline in prices. However, some important factors are at play, such as the export scenario, which remains buoyant. The volume of business already signed is significant, which shortens the trading window, especially in May, justifying weaker premiums. The export projection is heading toward 50 mln tons, a significant volume, even though we have not yet reached May.

Buyers may become less aggressive, since large volumes have already been signed. In the domestic market, the industry has been slowing down offers, given the still high prices in the physical market. The industry is even paying above parity, but the spread between buyers and sellers is wider, as producers seek firmer prices in the short term.

Tags: Brazil, prices, soybeans, US, Market