Commodity Shuttle: Commodity prices rise again strongly, contradicting the rhythm of oil, which falls


After a start to the week that seemed to show a downward trend and accommodation in agricultural commodity prices, this Thursday (4th) was a day of tension and highs.

A lot is still at stake and makes it difficult to assess the sector. The Ukrainian government believes in a production close to 65 million tons of grain, a scenario that is still bad in relation to the country’s potential, but better than the pessimistic estimates of a volume of less than 50 million tons.

Covid-19, which the world is forgetting a little bit, still has strong effects on the market closure policies adopted by China.

The world economy’s next steps are still quite uncertain, but high interest rates will cause a slowdown.

The weather is not favorable for crops in the United States. It rains, but evapotranspiration, due to the intense heat during the day and night, inhibits the productive potential of crops.

In addition to these factors that have been taking place over the past few months, the visit of Nancy Pelosi, Speaker of the US House of Representatives, to Taiwan brings uncertainty about China’s behavior towards the US.

Mutual funds are expecting a return from the highs as they increased their long positions in the grain market.

Among the factors that weigh on the market is the reduced supply of products. The ending stocks of American soybeans for the 2022/23 crop should end the period close to 6 million tons, the lowest volume in a decade and enough for just 19 days of consumption.

This volume considers a US crop within the normal range. Any negative interference from the weather will cause production to fall below the 122 million tons currently forecast.

The unfavorable scenario for soybeans made soybean meal up 6.6% this Thursday on the Chicago Stock Exchange. The first contract rose to US$ 514 (R$ 2,679) per ton.

“It’s an inexplicable market and difficult to assess. The same bran that had suffered a strong fall on Monday (1st) goes up again”, says Fernando Muraro, from AgRural.

He believes that, given so many variants, the market will remain very volatile. The weather, however, due to the effect that it can have on the crops during this period of grain filling, will continue to interfere a lot.

The rise in soybean meal prices comes at a time when Brazil is increasing exports. From January to July this year, there were 12.3 million tons, 23% more than in the same period in 2021.

This rise, if it continues, is bad for domestic protein producers, who were feeling cost relief from falling corn prices.

The main markets for Brazilian meal are in Asia. Thailand, Indonesia and Vietnam lead imports, while China is rehearsing the beginning of purchases.

The world’s third largest producer of soybean meal, Brazil is the second largest exporter. The soy derivative gains importance in the world market because Ukraine, the main exporter of sunflower meal, has compromised foreign sales due to the war.

This Thursday, soybeans in grains returned to trading above US$ 16 per bushel (27.2 kg), with a 3.5% increase in the Chicago Stock Exchange’s November contract, the most traded.

Bran rose 6.6%; soybean oil, 1.5%; wheat, 2.4%; and corn, 1.8%.

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