After the slight declines on Thursday, soybean prices resumed their upward climb today on the Chicago Stock Exchange, driven by the dry weather that affects crops and soils in large agricultural areas of South America and that is already lowering expectations of crops in Brazil, Argentina and Paraguay. The external rises also had their counterpart in the local market, both for physical merchandise and for contracts in the futures market.
For soybeans with immediate delivery at the Gran Rosario terminals, the factories offered 387 dollars per ton, US$7 more than yesterday. The new offer, equivalent to 39,892 pesos per ton, exceeded the 38,236 pesos calculated by the Rosario Stock Exchange (BCR) as the theoretical payment capacity of the export oil industry.
Sources from the commercial sector indicated that for large lots there were buyers willing to pay up to 390 dollars per ton. In addition, for sustainable soy, a bonus of 5 dollars was added to the offer of 390 dollars.
The Matba Rofex slates reflected increases of US$6.60 and 11.40 on the January and May contracts, whose adjustments resulted in 391.20 and 368.40 dollars per ton. In the weekly balance, these positions gained 4.9 and 6.9% compared to 373 and 344.50 dollars on Thursday, December 30.
Regarding the export market, the Ministry of Agriculture of the Nation revealed increases of 9 and 14 dollars for the FOB values in the Argentine ports of soybeans and soybean meal, which went from 603 to 612 and 456 at 470 dollars per ton, respectively. In contrast, the value of soybean oil fell by 10 dollars, from 1,340 to 1,330 dollars per ton.
Speculators today redoubled their bet on seeing cuts in South American soybean harvests and better options for US sales of grain, but especially soybean meal. That move was reflected on the Chicago boards, where the January and March positions of the oilseed climbed US$8.91 and 8.45 at the end of the day with adjustments of 514.96 and 518.18 dollars per ton. In the weekly balance, these contracts rose by 5.2 and 5.3% compared to 488.23 and 492.09 dollars on the previous Friday.
As for soybean meal, today its value in Chicago increased by US$14.44, going from 463.40 to 477.84 dollars per ton. Since the end of November, the value of the by-product of the oilseed rose 24.3% compared to the 384.48 dollars in force at the time. The chance that a lower production of soybeans in Argentina will adjust milling and with it the supply of flour from the world’s largest supplier does not go unnoticed by speculators operating in the US market.
By volume and chronology of crops, the greatest attention of the operators is focused on the south of Brazil, the region that has been suffering from a severe drought in the states of Paraná, Santa Catarina, Rio Grande do Sul and Mato Grosso do Sul, which motivated private estimators to cut their expectations on soybean production to levels below the record achieved in the previous campaign, when 137.32 million tons were raised. In effect, first the American StoneX and then the Brazilian AgRural adjusted their projections from 145.10 to 134 and from 144.70 to 133.40 million tons, respectively.
Next Wednesday the United States Department of Agriculture (USDA) will publish its new monthly report and there it is expected to cut its estimate for the Brazilian harvest from the 144 million tons calculated last month. The same goes for the National Supply Company, dependent on the Brazilian Ministry of Agriculture, which in December projected 142.79 million tons and which will release its January report next Tuesday. The consensus among the operators is that these organisms will make measured adjustments, according to the conservative criterion that they usually keep until the losses are inexorable.
In Argentina, adjustments to harvest expectations are also expected, when a little less than 7% of the planned area still remains to be sown. Yesterday, the Buenos Aires Cereal Exchange reduced from 56 to 48% the proportion of soybeans in excellent/good condition, while it cut from 69 to 58% the portion of soils under optimum/adequate moisture conditions. In December, the USDA estimated the Argentine production of the oilseed at 49.50 million tons, a volume that no one takes for granted at the local level and that is well above the 44 million forecast by the Buenos Aires Cereal Exchange.
In addition, the expectations of dry and very hot weather that govern next week do not allow us to glimpse a better agronomic outlook for crops. “Rains that were in sight on January 12 and with good coverage for the center of the Pampas region have disappeared from the models again. The problem of lack of moisture ingress is aggravated by the presence of an important high pressure center located on the eastern margin of the country.On the other hand, temperatures will continue to rise steadily and will progressively exceed the normal values for January. Both the minimum and maximum records will increase as the days go by, reaching extreme values, especially at the beginning of next week”, José Luis Aiello, doctor of Atmospheric Sciences, warned yesterday in the report of the Strategic Guide for the Agro of the BCR.
The triumvirate of South American nations that will see their production expectations truncated by the dry weather is completed by Paraguay, where from the 10 million tons forecast by the government of that country at the beginning of the campaign and by the USDA in December, now it has gone to a volume that private companies estimate between 7 and 7.50 million tons.
But in bullish times like the current one, where the benefits for local producers are limited by an expectation of lower yields and by the uncertainty of not knowing how much can be harvested if the dry weather persists, it should be borne in mind that even with the cuts before cited the harvest in Brazil, which has already started, will dump a large volume of soybeans into the commercial circuit that will focus the attention of Chinese buyers on the Brazilian grain, to the detriment of US merchandise, something that can generate losses in Chicago from the second fortnight of January and that may have a negative correlation in the local market.
