- World production estimated above consumption in 2023/24, according to the USDA;
- Record of more abundant rains in Brazil's soybean areas and good expectations for the coming weeks;
- Productivity of what was planted later in Brazil is expected to be better;
- Favorable crop in Argentina;
- Concerns about the pace of global demand;
- Weak accumulated exports sales from the US.
- Heated American domestic consumption;
- StoneX cuts soybean production again for 2023/24;
- Production estimates cut by CONAB and USDA.
- The Argentine situation still favors retaining soybean as insurance;
- Current hot and dry weather in parts of Argentina.
Last week, soybean quotes trended lower in Chicago, with the March contract ending Friday's session (February 2) at 1188.5 cents per bushel, a 1.7% decrease in the period. Despite another weekly drop, there were trading sessions with positive results, but the fundamentals weighing on prices, such as the Argentine crop compensating for losses in Brazil and concerns on the demand side, remained present.
The weather in South America was on the radar and even supported the quotes, with little rain and intense heat in Argentina. The soybean planting has been completed in the country, according to the Buenos Aires Exchange, amidst this more adverse climate scenario, which led to a 13 percentage point decrease in crops in optimal/adequate water conditions. In contrast, the overall normal/excellent condition dropped by 6.5 percentage points. The water stress was concentrated north of La Pampa and west of Buenos Aires. Nevertheless, these most affected regions still have over 90% of crops in normal/excellent conditions. For now, the crop estimate for the country remains at 52.5 million tonnes, but the weather will continue to be the focus, with the crops going through crucial phases.
In Brazil, the 23/24 harvest reached 14.9% of the total, according to StoneX monitoring. As already highlighted, the initial lots showed weaker productivity results, but the expectations are that there will be an improvement in the progress of field activity.
StoneX has again lowered its estimate for Brazilian soybean production in 23/24, which now stands at 150.35 million tonnes, 1.6% lower than the January figure. Compared to last year's record, a 4.8% decrease in production is expected. Highlighting the decrease in area in São Paulo and productivity in Paraná. The Southern state faced excessive rainfall at the beginning of the cycle, while the end of 2023 and the beginning of 2024 were drier.
On the other hand, the expected yield for the states of Maranhão, Tocantins, Piauí, and Pará increased with more significant rainfall in the recent period.
On the demand side, concerns about China continue, with the country's crushing margin remaining red. It should be noted that the basis declined in Brazil last week, reinforcing the advantage of Brazilian soybean in China compared to the American one. Thus, the pace of sales and shipments from the US remains on the radar.
The week ended on 01/25, and the net export sales of the US 23/24 crop were only 164.5 TMT, well below the lower end of the estimates ranging from 500,000 to 1.05 MMT. In the accumulated, negotiations are at 38.1 million tonnes, compared to 47.1 million tonnes at the same time last year, while the USDA estimates for shipments in 23/24 are 6.45 million tonnes below the 22/23 cycle. Thus, it is already considered that US export sales are weaker than necessary to reach the estimated number of shipments for the 23/24 season, at 47.76 million tonnes.
In this week that begins, the main highlights are the monthly reports from USDA and CONAB, with prospects of further reductions for Brazilian production. Furthermore, the demand side must also be monitored, emphasizing the American exports and the prospects for China.
