Chicago Board of Trade (CBOT) soybean futures for July delivery fell by 18.50 cents, or 1.48%, to $12.29 1/2 per bushel on Tuesday. This decline, coupled with a weakening dollar, led to significant drops in Brazilian soybean prices.
Brazilian Soybean Market Reaction
On Tuesday, May 28, the Brazilian physical soybean market experienced intermittent movements. Prices dropped notably due to the fall in Chicago prices and the weakening of the dollar. According to Safras Consultoria, the declining prices discouraged producers from selling, leading to fewer sellers in the market.
Here is a summary of the price changes for a 60 kg bag of soybeans across various regions in Brazil:
- Passo Fundo (RS): from 134.50 R$ to 133 R$
- Missions Region: from 133.50 R$ to 132.50 R$
- Rio Grande Port: from 141.50 R$ to 140 R$
- Cascavel (PR): from 132 R$ to 130 R$
- Paranaguá Port (PR): from 140 R$ to 138 R$
- Rondonópolis (MT): from 125 R$ to 123 R$
- Dourados (MS): from 125 R$ to 124 R$
- Rio Verde (GO): from 125 R$ to 123 R$
Chicago Board of Trade Movements
On the Chicago Board of Trade, soybean futures contracts for July closed lower on Tuesday. The performance of soy meal increased following a rise in oil prices, despite the North American byproduct being less competitive compared to South America.
The pressure on soybeans also stemmed from advances in U.S. planting (68% of the area planted according to USDA), profit-taking after the holiday, and last week’s gains. According to a weekly report from the USDA, North American soybean export inspections reached 212,105 tons in the week ending May 23. This is up from 192,232 tons the previous week.
Specific contract changes were as follows:
- July soybean contracts: down by 18.50 cents or 1.48%, closing at $12.29 1/2 per bushel.
- August position: down by 16.00 cents or 1.28%, closing at $12.29 per bushel.
In byproducts:
- July soy meal position: down by $9.90 or 2.56%, closing at $376.60 per ton.
- July soy oil contracts: up by 0.57 cents or 1.26%, closing at 45.52 cents.
Currency Exchange Impact
The commercial dollar session ended with a 0.32% decrease, trading at 5.1549 R$ for sale and 5.1529 R$ for purchase. During the day, the North American currency fluctuated between a minimum of 5.1348 R$ and a maximum of 5.1688 R$.
Commentary
The fluctuations in the global soybean market underscore the interconnectedness of agricultural economies. While the drop in Chicago prices directly impacts Brazilian farmers, the global demand dynamics and currency exchange rates add additional layers of complexity. Producers and traders alike must stay vigilant, adapting to these rapid changes to mitigate risks and capitalize on opportunities. As we move forward, monitoring weather conditions, crop reports, and international trade policies will be crucial for forecasting future market movements.