Soybeans: Brazil’s record harvest could drag prices down

Agriculture analysts, who have analyzed figures provided by provinces in recent weeks, believe that when volumes from all three regions hit the market, they could push down soybean futures prices, which have reached their peak. high level in nearly seven years on the Chicago Board of Trade (CBOT).

While CBOT soybean futures peaked at nearly $ 14.60 a bushel in mid-2014 on Tuesday, they quickly descended from those highs amid concerns about Brazilian production, Jack noted. Scoville, who oversees crop research for the Price Futures Group in Chicago.

The Brazilian harvest will be fatal

Scoville added:

“The sale came from the idea that the impending Brazilian harvest will kill the current demand for American soybeans.”

“The Brazilian harvest has been delayed due to late planting dates. There was dry weather at the start. Now too much rain has caused harvest delays and some quality problems. The rains are coming to an end in some. regions and harvesting activity have therefore increased, but harvesting remains very slow overall. “

But it still arrives, this record harvest.

Luiz Roque, an analyst at Brazilian agribusiness consultancy Safras & Mercado, says local farmers are expected to produce at least 130 million tonnes in 2021.

In January, Safras & Mercado forecast Brazilian soybean production of 133.1 million tonnes. But she has revised that forecast down in recent days as rains that fall during harvest affect quality and hurt yields in the Midwestern states.

According to Reuters, Brazilian farmers harvested around 35% of the area planted to soybeans until Thursday, the slowest pace in a decade, due to the March rains. At the same time last year, 49% of the area had been harvested in Brazil.

AgRural, an agribusiness consultancy from Sao Paulo, said that due to the high humidity in recent weeks, “the quality issues have increased.”

Despite this, last month AgRural raised its production forecast to 133 million tonnes for the current 2020/2021 season, from 131.7 million tonnes previously.

This projection already takes into account the decline in average yields in most of the growing regions of Brazil, the consulting firm said. However, if the rains persist in March, yields may decline further in some states, particularly in Mato Grosso state, where soybeans are highly productive.

The US Department of Agriculture said on its Agweb.com site on Wednesday that it expected domestic soybean supply and use projections for 2020/21 to be mostly unchanged in March. , in the largest soybean producing countries in the world.

U.S. crushing and exports were forecast at 2.20 billion bushels and 2.25 billion bushels, respectively, the USDA website said. He adds that closing stocks are expected to remain at 120 million bushels, 405 million below last year’s record.

Brazilian production could tip the scales

This means that Brazil’s record harvest could tip the balance in the global market if demand from number one buyer China were to ease, Price Futures Group’s Mr. Scoville said in a note Tuesday.

Any mismatch could weigh on CBOT soybean prices, although the United States has sold 98% of its target soybean quantity for the current marketing year, Scoville said, adding:

“China bought this year and next year from the United States, but now mostly from South America. There is little room for error.”

The USDA has confirmed Scoville’s concerns, at least on the physical price front.

The average soybean price for the season in the United States is expected to be $ 11.15 per bushel, the same price as last month, the agency said. Although current spot prices are significantly higher, quotes received have averaged just over $ 10, reflecting futures prices at lower levels, the USDA said.

Technical data suggests buy signal for CBOT soybeans

CBOT soybeans are up just over 9% on the year to Wednesday’s level of $ 14.33 a bushel. The market has grown almost steadily since the end of May, gaining a total of 70%.

Mr Scoville predicted that the May soybean futures contract could face resistance at $ 14.65, $ 14.72 and $ 14.84 and find support at $ 14.33, 14, $ 03 and $ 13.68.

As with all technical screenings, we invite you to follow the calls but temper them with the fundamentals – and moderation – whenever possible.

Disclaimer: Barani Krishnan uses a range of perspectives outside his own to bring diversity to his analysis of any market. As an analyst for Investing.com, he presents divergent views and market variables. He does not have a position in commodities and the securities he writes about.

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