- World production is estimated to be above consumption in 2023/24, according to the USDA;
- Most abundant rainfall in Brazil's soybean areas;
- Full crop potential in Argentina, with good rainfall forecasted;
- Concerns about the pace of global demand;
- Weak accumulated export sales from the US to China;
- Despite cutting the Brazilian crop, USDA brought production figures above market expectations.
- Heated American domestic consumption;
- StoneX cuts soybean production for 2023/24, which is no longer a record;
- Cuts in estimated production by CONAB and USDA;
- The Argentine situation still favors retaining soybeans as insurance;
- Brazilian exports above 100 million tonnes in 2023.
In Chicago, soybean futures started last week with a sharp drop, with March/24 starting Monday (8), which quoted near 1240 cents/bu, below the previous week's closing at 1256.25 cents/bu. Throughout the week, the contract remained relatively stable. Nonetheless, on Friday (15), after the release of the USDA's supply and demand report, futures "melted," with March/24 trading below 1210 cents/bu. The contract in question showed some rebound at the end of the day, but it fell short of recovering all the losses, closing the quoted period at 1224.25 cents/bu, a drop of 2.5% for the week.
Among the main causes of the price drop were the rainfall indices, which indicated acceptable levels of rain both in Brazil and Argentina, improving the prospects for the oilseed supply, the disappointing data on US export shipments and sales, and the WASDE, which brought positive revisions to North American and Argentine productions and a smaller than expected cut in the Brazilian crop.
The US Export Inspections Report released last week indicated that the country exported 674.75 TMT of soybeans in the week ending January 4, down from the 969.45 TMT recorded in the previous week and the 1.46 men in the equivalent week of the previous season. Thus, total loadings in the 23/24 crop reached 23.95 million tonnes versus 30.24 million in the same period of the 22/23 cycle.
The USDA export sales report showed a net sale of 280.4 TMT in the week ending on January 4, compared to 201.6 TMT in the previous week and well below the 717.4 TMT sold in the equivalent week of 2023. In addition, the volume remained below the lower limit of market expectations, which ranged from 325 thousand to 950 thousand tonnes. The sales of the 23/24 crop totaled 36.8 million tonnes, against 44.3 million in the same period of 22/23.
On Wednesday, CONAB (National Supply Company) updated its forecast for the 2023/24 crop, still expecting a record of 155.27 million tonnes, based on the institution's historical series, representing a 0.4% hike year-on-year. This expected result can still be considered optimistic; however, the reduction compared to the December report was 5 million tonnes.
Defined as one of the most challenging in its projection, the next crop had heterogeneous rainfall levels in the main producing regions. CONAB also informed that the expected decrease is already 4.2%, considering that the production of 162 million tonnes was initially expected.
Also, in the middle of the week (Jan 10), the Rosario Stock Exchange raised its estimate for the 2023/24 soybean crop, which increased from 50 to 52 million tonnes. Among the causes of the adjustment was the good rainfall levels in several producing regions that allowed for optimism regarding productivity in the next harvest. A low moisture level is observed in some key regions of the country, such as La Pampa, the productive soils of Greater Buenos Aires, almost all of Córdoba, and the Argentine Chaco. However, overall, the rains have arrived to allow the soybean crop planted earlier to be in good or excellent condition, with only the late soybean crop being slightly more affected for having missed the ideal planting window but still having possibilities of rebound. According to the institution, 51% of the crops had good/excellent condition last week, an increase of 9 p.p. compared to the previous week and a figure well above the 4% recorded in the same week of 2023.
Finally, the event that moved the market the most during the week was the USDA's WASDE. The Department, as expected, reduced its estimate for Brazil's 23/24 crop by 4 million tonnes to 157 million tonnes. Nonetheless, the figure exceeded the market's average expectations, at 156.3 million. The crop in Argentina increased by 2 million tonnes to 50 million, exceeding the average expectations of 48.9 million. Another factor that surprised the market was the increase in US production to 113.35 million tonnes, which helped alleviate the country's stocks a little and put pressure on prices.
Speaking of stocks, USDA also released its quarterly stocks report, indicating the position of American soybean stocks on December 1, 2023. The Department indicated a volume of 81.65 million tonnes, above the market's average expectations (80.97 million).
