The price of soybeans continues to fall. Since November 2023, oilseed futures have not stopped falling on the Rosario Stock Exchange. On the 22nd of the same month, the price of the May 2024 position closed at 347.5 dollars per ton, on 21 December it fell to a minimum of 298.1 dollars and then rose slightly again, although always remaining at low levels.
This Monday, after last week’s 3% drop, soybeans were once again trading lower in the Chicago market due to better weather conditions in South America and rain in the region. At noon on the first business day, the price of soybeans on May 24 was $458.64 per ton, $5.88 lower than the previous day. And such a low value has not been touched since 2021.
Soybean futures fell Friday in Chicago, posting their third weekly decline, following rain in drought-hit growing areas in Brazil. “They have reduced concerns about crop losses in the world’s largest oilseed exporter, while stabilizing yields could prevent soybean buyers from shifting export activity from Brazil to the United States as nations compete for sales on the world market”, explained the Rosario Stock Exchange.
Reduced estimated harvests in Brazil, the world’s top exporter, due to drought will reduce global supply. However, the data considered in this regard is highly variable. “There are reports predicting soybean production of 150 million tons and others that don’t know if it will reach 120,” says Cereal Corridors Center vice president Santiago Arce.
“Internationally the price is falling, Brazil is having climate problems, especially in the north, so the pressure on the market will ease. And in Argentina soybeans are doing well this year, 93% of soybeans are already planted “First-class soybeans and many second-class soybeans will be planted, which will put downward pressure on the market,” Arce said.
The USDA (United States Department of Agriculture) reported late last week that export sales of 2023/24 soybeans from the United States for the week ending December 28 were 201,600 metric tons, per below analysts’ expectations which had reached 500,000 tonnes, which added further pressure to the market.
“Whether Brazil’s production declines or not, that will be the question. Even though the funds have liquidated much of their position, we have to see what happens in next Friday’s USDA report,” Arce said.
Therefore, producers’ expected planting margins may be lower than estimated. “I don’t know if they will be as good. Even if the price goes down, this season there will be more kilos which, in theory, should compensate for the drop in price. But we have to see what happens here with the increase in fuels, in inputs. There are many unknowns, there are many variables that can influence. Compared to last year it will certainly be better, because with the drought there was no way, but the producer will have to continue to look at the variables and tools, including financial ones, because for me the numbers will be pretty fair,” Arce analyzed.
According to the manager, currently producers do not sell forward because they do not know what the exchange rate will be at which they will set the price. “You don’t know if it’s 80-20, 50-50, so you don’t sell. It becomes complicated, and they are basic hedging tools that the producer uses to know where he stands, because otherwise he produces and he doesn’t have the price of his production, ” has explained.
Many farmers, who still had soybeans at nearly $350 a ton in November 2023, didn’t sell because, even though they wanted to hedge in the futures market, they didn’t know what exchange rate they were making. At the time the recommendation was to resort to hedging with Put options but very few accepted them due to the uncertainty.
Today the soybean scenario in terms of prices is one of total uncertainty. At an international level, until the extent of the damage caused by the drought to Brazilian production is known, it is not known how much the price of oilseeds will fall. At a local level, the lack of knowledge of the measures that the new national government could adopt regarding the marketing of cereals, the devaluation and the increase in prices, keep producers’ sales on standby.
Source: Clarin
