Soybeans with delivery in May, with the highest values of the last six campaigns
By midweek, soybeans could be sold for May delivery at $368 per tonne (red line on chart). It is a very high value considering that it pays 33% of withholdings, which comfortably exceeds the prices of the last six campaigns, including 2020/21, remembered by many producers for its high prices.
In comparative terms, it should be noted that in the campaigns that go from 2016/17 to 2019/20, the value that producers could obtain in May of each year did not exceed 260 dollars per ton, as shown in the graph.
Such high prices are a consequence, mainly, of the doubts surrounding the Argentine production in the current campaign, that it began with a reduction in the sown area and continued with a shortage of water throughout the development of the crop.
The area planted in the cycle 2021/22 reached 16.3 million hectares, the lowest in the last 15 years because corn promised better results at planting time. In addition, there were delays in implantation due to insufficient humidity in October and November and the current state of the first crops is greatly affected by insufficient rains.
Nevertheless, there would be some chances of recovery if the precipitations of the second fortnight of January and February tended to normal. But the market does not have that data today and therefore raises prices every day waiting for the worst scenario. Meanwhile, in its latest report, the USDA reduced the estimated production for our country from 49.5 to 46.5 million tons.
While Brazil, which in recent years has established itself as the world’s leading soybean producer, with 138 million tons in the 2020/21 cycle, would reach 140.5 million in 2021/22, according to the latest estimate from Conab (Brazilian National Supply Company). However, hIt must be clarified that this estimate is based on data from the beginning of January and the crops continued to deteriorate as the almanac progressed.
The neighboring country increased the planted area by 3.8% in the current cycle, but did not reach a correlate in production due to the effect of the aforementioned drought in the southern states and due to excess humidity during the harvest in Mato Grosso.
In Paraguay there will also be production cuts. In sum, the USDA estimated a drop in South American production (Brazil, Paraguay and Argentina) of 9.5 million tons.
While, the Chicago market was trading at $511 a ton midweek, with a firm trend because the rains are expected to continue in Mato Grosso in the coming days and because of the uncertainty about the evolution of the rains in Argentina, Uruguay and Paraguay in the coming weeks.
The author is a market analyst and General Manager of AZ-Group