Shuttle: Soy and corn will have good prices for Brazilian producers

Brazilian producers may have another year of good prices for soy and corn. They will not be explosive at all, but internal and external conditions favor the country.

Daniele Siqueira, an analyst at AgRural, says that the current trading values ​​in Chicago are not very far from the maximum quotations ever registered for these products.

The March soybean contract was traded, this Wednesday (4), at US$ 14.8350 in Chicago, while the maximum quotation reached by the oilseed for that same contract had been US$ 15.7225 per bushel (27.2 kg), on June 9, 2022.

In the case of corn, the cereal ended this Wednesday at US$ 6.5375 per bushel (25.4 kg), not far from the record of US$ 7.6850 of May 16 last year.

With the arrival of the American harvest and the action of investment funds, prices weakened in the first months of the second half of last year.

Funds, which are risk-averse, reduced their participation in the commodities market due to rising interest rates and the expected global recession. As a result, prices dropped.

The numbers of the United States harvest, however, returned to give sustainability to the negotiations, without great chances of falls.

The United States produced 8 million tons less than expected. Oilseed crushing is heating up in the country, and stocks are tight.

From now on, eyes will turn to South America, according to Daniele. Brazil should have a super harvest, but in some regions, such as Rio Grande do Sul, the climate is beginning to affect part of the crops.

The climatic complications also affect crops in Argentina, a country that is the third largest producer in the world. Brazil leads, and the United States follows.

Some factors, however, do not allow for a greater expansion in prices, based on the information available so far on this market.

Chinese purchases are key factors. In the 2021/22 harvest, they purchased 91.6 million tons. In this, they should acquire 98 million.

Even with a forecast of a break in the Argentine crop, however, production in South America should be at least 30 million tons more than last year, according to the analyst. Demand is not keeping up with supply, she says.

The Brazilian internal trade will also be decisive for the formation of prices. Sales for the 2022/23 season are the latest since the 2008/09 period. A super harvest and sales pressure can inhibit prices. The value of the dollar is the hope for the producer, she evaluates.

From now on, therefore, China, the size of the Argentine and Brazilian crops, expected planting in the United States (which starts in April) and the participation of investment funds will determine soybean prices.

In the case of corn, Brazilian producers should have better prices, but nothing explosive. Ukraine continues to struggle to export, and Argentina has imposed limits on exports.

In addition, the Argentine 2022/23 crop is experiencing adverse weather conditions, and exports from the United States are slower due to difficulties in exports via the Mississippi River. The preference was for the disposal of soybeans.

All this brings the world’s main importers of the cereal to Brazil. It will be a first quarter of heated exports. Only forecasts for January already indicate 6 million tons, says Daniele.

According to data from the USDA (United States Department of Agriculture), soybean production for the 2022/23 crop in South America —still not considering the expected drop in Argentina— is expected to rise to 217 million tons, up from 181 million in 2021 /22.

World oilseed production is 391 million, with total consumption expected at 381 million. Corn production and consumption are practically stable, both at 1.16 billion tons.

Given the expected good level of corn and soybean prices in Brazil, the profitability of producers will depend on how purchases of inputs were made, which rose a lot last year.