Impact of Currency Exchange Rates
In May, the exchange rate had a positive effect on the Brazilian soybean market. The commercial dollar appreciated by 0.33%, closing at 5.20R$ -or 0,91€ . This appreciation contributed to the increase in soybean prices, as international buyers faced higher costs when purchasing Brazilian soybeans.
Floods in Rio Grande do Sul
The flooding in Rio Grande do Sul created uncertainty around the soybean harvest in Brazil, causing a reaction in prices both domestically and on the Chicago Board of Trade (CBOT). Farmers took advantage of rising prices to sell their stocks.
- In Passo Fundo (RS), the price for a 60-kilogram bag of soybeans increased from 123 R$ to 133 R$ or 21€ to 23 € over the month.
- Similarly, in Cascavel (PR), prices rose from 123.50 R$ to 130 R$ or 21,71 € to 22,85€
- In Rondonópolis (MT), from 116 R$ to 125.50 R$ or 16€ to 21€
- At the Port of Paranaguá, prices climbed from 130 R$ to 138 R$ or 22,85€ to 24,26€ per bag.
Strong Demand from China
Despite the increased supply, premiums remained strong due to China’s concentrated demand in South America. This demand helped sustain higher prices despite the ongoing uncertainties.
Chicago Board of Trade Movements
On the CBOT, the most actively traded July soybean contracts rose by 4.86% in May, reaching 12.19 1/2 USD per bushel by the morning of May 31. The production losses in Rio Grande do Sul ensured that prices continued to rise, even with the progress in planting and weak demand for American products.
Outlook for June
Looking ahead to June, attention will shift to the climate in the United States and the final figures regarding the harvest failures in Rio Grande do Sul. These factors are expected to influence soybean prices both in Brazil and internationally. The USDA’s monthly report, due at the end of the month, and consolidated planting data in the US will be critical for the market.
The recent fluctuations in soybean prices highlight the intricate balance between local events, such as natural disasters, and international market dynamics. The strong demand from China continues to play a crucial role in stabilizing prices, while market participants keep a close watch on developments in the US and Brazil.