Supply shortage and rising premiums support domestic soybean prices

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With no supply and the growers’ restrained stance, the Brazilian soybean market has been showing price distortion and scarce business in the main regions of the country. The prices are practically nominal, and sales are limited to very restricted volumes. Prices charged internally continue to set records.

Last week in Passo Fundo (RS), a 60-kg bag went up to BRL 117.00. At the port of Rio Grande, prices reached BRL 120.00.

In Cascavel, Paraná, prices rose to BRL 112.50 a bag. At the port of Paranaguá (PR), a bag increased to BRL 117.50. In Rondonópolis (MT), prices remained at BRL 112.00. In Dourados (MS), at BRL 112.00. In Rio Verde (GO), a bag rose to BRL 108.00.

On the Chicago Board of Trade (CBOT), last week was positive. The contracts maturing in November reacted and are around USD 9.00 per bushel. Despite the good development of U.S. crops, the market was driven by the good demand for U.S. soybeans.

The United States Department of Agriculture (USDA) has announced sales by private exporters to the Chinese market almost on a daily basis. Since the 13th, operations involving 1,883 million tons for China and 868,300 tons for undisclosed destinations have been confirmed.

U.S. net soybean exports for the 2019/20 season, started on September 1, stood at 365,200 tons in the week ended July 16. That represents an increase of 17% over the previous week and a decrease of 31% from the four-week average. China led imports, with 209,900 tons.

For the 2020/21 season, exports hit 2,300,500 tons. Analysts were expecting exports between 1.7 and 2.7 million tons, considering both the seasons.

The dollar, on the other hand, had an opposite trajectory last week, accumulating devaluation in the face of a more positive economic scenario – at least in the first part of the week, when news about financial aid in Europe and progress in the search for a vaccine for coronavirus brought the U.S. currency down against the real. On Thursday and Friday, the geopolitical tension between China and the United States caused the currency to rise again, ending above BRL 5.20.

Brazilian export premiums continued the positive trend, reaching between 148 and 165 points above Chicago for September.