Brazilian soybean market had a more agitated week in terms of business

The Brazilian market had a more agitated week in terms of business, due to volatility among price makers, except for premiums, which have been mostly on the sidelines. The adjustment in daily prices came mainly via CBOT and the dollar.

Large volumes were closed last week with more active farmer selling. Although prices remained within a sideways range, there was a well-defined range, in which sellers took advantage of opportunities, especially on Friday (23), with the dollar’s surge in the morning after changes in the Tax on Financial Operations announced by the government. This shook up the exchange rate, bringing good price opportunities.

Sell spreads have narrowed somewhat, with producers already thinking about space for corn and stronger demand in the short term. Chicago operated at attractive levels for business, with a range of 0.40 cents, and stable premiums supported better indications in futures contracts, with a FOB premium reaching 0.80 cents for August.

In Chicago, the market is more volatile at the moment, given the excellent progress of the US planting, well above average, and with the current favorable weather conditions—but with attention to the heavy rains forecast for the Midwest in the coming few weeks, as indicated by weather maps.

We can still see adjustments in the area planted with soybeans, remembering that the US ending stocks projected for 25/26 are tighter due to the smaller area and increasing crushing. However, the key point continues to be the pace of exports. A tight stock will only materialize if US exports do not decline—which would depend on strong purchases by China, something that could happen after the recent trade “truce” between China and the United States.

The weather continues to be a point of total attention, since a smaller planted area requires high yield to maintain production projections. In the short term, changes in the weather can bring positive bias to prices, but in the long term, it is the level of global supply that tends to drive the market.

In Brazil, premiums are still relatively high but may decline further due to seasonality. Shipping volumes remain high until June but tend to decline in the second half of the year, especially if China chooses to buy US soybeans from the new crop. In addition, Brazil continues to have a supply premium in 2025, and Argentina has improved crop expectations for this season.

With buyers relatively well-supplied until the end of June, premiums at Brazilian ports may decline. If China guarantees supply with the new US crop, expected to enter the market between October and November, this will put even more pressure on Brazilian premiums—unless significant weather problems arise that severely affect the new US crop.

The dollar may be a positive variable in price formation, but, paradoxically, a rising dollar may force premiums down, given the premium on soybean supply in Brazil. Brazil’s fiscal situation remains worrying. The recent movement in the exchange rate is still strongly related to the fall in the dollar on the international market (via DXY) and the attraction of financial capital via high interest rates. However, this trade-off may reverse. The cost of public debt is very high, with interest rates rising, and this makes rollover increasingly expensive, increasing domestic fiscal risk.

In March, there was a small primary surplus of BRL 3.6 bln, but interests on the debt increased by BRL 75.2 bln in the same month, which generated a brutal nominal deficit of BRL 71.6 bln. In other words, any surplus is practically zero, and, besides, it comes from revenue collection rather than from effective spending cuts, which highlights Brazil’s fiscal risk and tends to weigh on the exchange rate.

Tags: premium, China, Brazil, prices, United States, soybeans, Production, crop, yield, Market, demand