Weak premium for soybeans and greater external competitiveness in Brazil

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     Porto Alegre, March 2, 2021 – The behavior of the premium paid for soybeans at Brazilian ports remains a highlight. In the shortest position, soybeans are indicated in Paranaguá at -25 cents. This negative premium is justified by the lack of immediate demand. The delay in the harvest caused trading companies to extend their positions, trying to avoid the commitments at the beginning of the crop. Without immediate demand, the basis was negative. The fact is that there is more interest in selling than buying. External demand remains distant, waiting for more significant harvest progress here.

     Premiums are positive again for shipment from May, indicated at +12 cents/bushel against the CBOT. The export basis suffered a strong devaluation, under the pressure of the crop arrival and facing a very firm dollar against the real. This pressure is not only greater because growers have already committed a high percentage of the crop in advance. And with that, a good part of the harvest will be aimed to fulfill the delivery contracts.

     The weakening of the export basis keeps Brazil very competitive in the international scenario. While the premium in Brazil is around +12 cents for May shipment, in Argentina soybeans are offered at +85 cents. Albeit below +104 cents last week, it is still much higher than Brazilian sell prices. In the United States, the premium at the Gulf of Mexico is at +76 cents. All this aggressiveness should translate into an increase in the buying presence here, which stimulates new sales and helps to reduce the available physical supply. And that must lead to problems with the off-season supply, especially for the local industry.

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