Commodities Shuttle: Ups and downs continue, but grain prices remain at high levels

The international seesaw of grain prices continues. After getting close to historic values ​​last week, the products fell again this beginning of the week.

These uncertainties in the commodities market come from the delay in planting in the US, the lockdown in China and the increase in interest rates by the Fed (the American central bank).

The external instability, added to the rise of the dollar and the occurrence of small problems in the corn crop in Goiás, also affects the internal grain market.

Expectations are for an improvement in the planting of soybeans and corn in the United States next week.

With that, prices fell well this Monday (2), according to Daniele Siqueira, analyst at AgRural, from Curitiba.

For now, however, planting continues at a much slower pace than in previous years, due to the cold weather.

Until the beginning of this month, the North Americans had sowed only 8% of the area that will be destined to soy. The average of the last five years indicates a percentage of 22%.

Corn is planted in only 14% of the area, well below the 42% average for the last five years, according to data from the USDA (US Department of Agriculture).

Although the current scenario indicates little machine activity in the US fields, there are still prospects for a good recovery in planting, in Siqueira’s assessment.

The planting capacity of the North Americans is very large, with a potential of at least 11 million hectares per week, as occurred in early May of last year in the sowing of corn.

The planting of corn would only become quite complicated if the cold weather extends beyond the first half of this month. In this case, the producer would opt for soybeans, since corn productivity could be compromised.

Soybeans still have a more elastic period for planting, which runs until the end of June. The market is eyeing the United States planting because the world grain supply already has problems in several regions.

The participation of China, the world’s leading grain importer, is also uncertain at this time. The lockdown in Shanghai should not change the demand for food much, but it does interfere with logistics, with delays in the arrival and departure of products from Chinese ports, says Siqueira.

The grain market also suffers from the effects of the Fed’s interest rate policy, which, once again, should raise interest rates in the United States.

Rising interest rates take money out of commodities, a riskier market, and into other assets, causing prices to fall.

On Monday, although they remain high, commodity prices fell on the Chicago Stock Exchange. Soybeans fell 2.3% on the July contract to $16.46 a bushel (27.2 kg). Corn and wheat fell 1%.

Current prices are quite favorable to North American producers. In the 12 months to March, wheat is up 70%; corn, 35%; and soybeans, 17%, according to Usda.

In Brazil, the rise in the dollar allowed for a greater internal movement of business. Quoted at R$ 5.09, the US currency helps in the fall of soybeans in Chicago, due to the preference for the Brazilian product, but puts even more pressure on domestic prices.

The bag of soybeans is being traded at R$ 190 in Cascavel (PR), 10.5% more than a month ago. In Sorriso (MT), the value is R$ 171, up 8%.

According to quotations from AgRural, corn had a variation of 4% in Cascavel in the last 30 days, but rose 7% in Goiás, where crop conditions are not as good as in Paraná.

The market will still go through moments of uncertainty. China, which imported 99 million tons of soybeans in the last crop, is expected to buy 91 million tons this season (from October 2021 to September 2022).

Due to high prices, the Chinese are controlling purchases, mainly because the margins of protein producers are low, says the analyst.