Grain prices continue to fall and soybeans and corn have hit three-year lows in the Chicago market, losing about 10% so far in 2024. Wheat also continues to rise and has lost 7% this year .
Soybeans, for example, went from $550 in January 2023 to $455 in the first month of this year in Chicago, and futures yesterday were at $427.06 for March, $428.44 for May, 421, $73 for September and $419. for November. For its part, in the Matba Rofex, the local futures market, a year ago, the May 23 position (peak harvest month) for soybeans closed at $382, while yesterday, the May 24 soybean future closed at $275. Fondazione Mediterranea, this price scenario, if confirmed, would imply a loss of 18% of the real value of oilseeds in this campaign compared to 2023 and 24 to 28% compared to the peaks of 2021 and 2022.
The dynamics of the international corn and soybean market are complex and the factors that explain the collapse are multiple: adjustments in the area and in supply, decline in Chinese demand, rise in the dollar, flight of funds and evolution of the climate in the productive sectors areas.
On the one hand, “the USDA (United States Department of Agriculture) reports projects to increase in soybean acreage by 2024with higher inventories expected for corn, soybeans and wheat compared to the previous year,” explained market analyst Esteban Moscariello of Díaz Riganti Cereales.
The USDA estimates this Soybean ending stocks will rise 38%. towards the end of the 2024/25 harvest, which puts downward pressure on the prices of oilseeds and its derivatives. In the United States, foreign soybean sales remain 28% below last year’s pace, although the National Oilseed Processors Association (NOPA) said January crushing fell more than expected, which would put a limit on losses. For the North Country, the USDA also expects a 17% increase in corn ending supplies and a bumper harvest. There, foreign sales of this cereal are 40% lower than the previous year.
On the other hand, the recent rain fell in Argentina have made it possible to stop the deterioration that the soybean and corn crops were suffering due to thermal and water stress, and have led to an improvement in their conditions, consequently, yield losses will not be so marked and a good wheat harvest. thick.”The prospects of a adequate supply in South Americaeven in the face of the bad harvest in Brazil, they give way to continuous declines in the futures market”, explained Moscariello.
One of the main reasons for the collapse in soybean futures prices is the decline in Chinese demand which happens during the current holidays in the Asian giant, which means that few shipments have been made so far. However, “business activity is expected to gradually increase once China resumes activities after the Lunar New Year,” the analyst noted.
As Moscariello explained, Brazil’s greater competitiveness compared to the United States also has its share of responsibility in the downward pressure on oilseed futures, also due to the rise of the dollar and the drop in premiums, which cause the Brazilian product is cheaper than that of the northern country.
Likewise, the exit from investment funds who fled raw materials, also caused the collapse of cereal prices.
“The progress and conclusion of the South American harvest continue to be monitored by traders, as well as consumption, the macroeconomic scenario and the positioning of investment funds,” Moscariello said. The evolution of all these variables will determine the movement of commodity prices and short- and long-term trends.
Source: Clarin
