By: StoneX Intelligence Brazil, StoneX Intelligence Brazil
Combating inflation may lead to a recession;
Absolute production record in Brazil and lack of storage;
Pressured crushing margins in China and and increased outbreaks of ASF;
Chances of El Niño increase.
Considerable crop losses in Argentina due to the climate;
Last week, soybean prices in Chicago fluctuated and accumulated gains in the period, with the contract expiring in June ending Friday (5) at 1436.5 cents per bushel, up 1.2%
The fundamentals of the grain market did not have major news, with US planting being closely monitored, in addition to demand for soybean, given the harvest of a record crop in Brazil and losses of over 50% in Argentina.
On the other hand, the soybean movement on the CBOT ended up being influenced by corn and wheat and also by vegetable oils.
In Brazil, StoneX maintained the estimate for the 2022/23 soybean crop at 157.7 million tonnes, unchanged from the figure released in early April. With this, Brazil is confirming a historic production record, which could be even greater, were it not for the losses in Rio Grande do Sul, as a result of La Niña.
This week, Conab will update its monthly crop survey on Thursday (11) and the USDA will release the supply and demand report on Friday (12).
In Argentina, the soybean harvest reached 36.4% of the total on Wednesday (3), with an increase of 8.2 percentage points in the week and an average yield of 1.58 t/ha so far. For now, the Buenos Aires Grain Exchange (BCBA) is maintaining its estimate for the country's production at 22.5 million tonnes.
Regarding demand, it should be noted that Brazilian soybean exports in April totaled 14.3 million tonnes, a higher volume than that recorded in the same month of 2022, at 11.47 million.
Weekly intraday - May/23 (CME)
In the US, export inspections are on the way to meet the UDSA's export estimate for the 2022/23 crop year at 54.84 million tonnes. Export sales reached 289,700 tonnes in the week ended April 27, a volume within the range of estimates, between 100,000 and 400,000 tonnes, with the accumulated volume reaching 50.7 million. It should be noted that sales to China are 1.1 million ahead of the same period last year, while sales to other destinations are 8.7 million tonnes behind.
US weekly export sales (000 tonnes)
Also in the US, as highlighted in last week's report, planting is going well, with no major threats to the progress of fieldwork. The latest data, released on Monday (1) indicated that planting was 19% complete, 10 percentage points above that recorded in the same week of 2022.
As noted, wheat and corn registered increases, which also influenced soybeans, given the possibility that the agreement for agricultural commodities export through the ports of the Black Sea is not renewed. Russia has been threatening not to extend the agreement after May 18, claiming that the agreed terms are not being met. In addition, the Russians accuse Ukraine of an attack carried out by drones last week, which stirred up spirits, causing wheat to register a strong increase of more than 30 cents, on Wednesday (3), also influencing corn and, to a lesser extent, also soybeans.
On Friday (5), gains in palm oil influenced soybean oil and, by extension, soybeans. Expectations of a drop in palm oil stocks in Malaysia led prices in Bursa to record a strong rise in the last trading session of the week.
This week, the release of the USDA supply and demand report is much awaited, as it will include estimates for the 2023/24 season. Although numbers are published for the whole world, the greatest expectation is related to data for the US. Usually, the May report does not bring big surprises, remaining in line with the numbers for planting intentions and the Agricultural Forum, but the possibility of something different feeds into market expectations.
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