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 Soybeans
16 July 10
Weather in USA and international
demand keep quotes firm
In the first fortnight of July, soybean prices increased in the
domestic market due to the international demand and concerns about
crop yields in the USA. Brazilian agents have turned their eyes to
weather conditions in the Mid-Western region of the USA and to the
potential demand from China, which remains high. It is off-season
period in Brazil and, therefore, soybean producers focus on planting
the new crop. Then, trades in this period of the year are usually
sluggish. This year, however, remaining batches were still available
to trade and prices are taking an upturn.
Regarding the domestic market, trades were heated. Some sellers,
however, were retracted because they expect other price rises, which
have limited the number of trades. The CEPEA/ESALQ Index (Paraná
state – reference for trades in Brazil) for soybean boosted 6.05
percent during June 30 and July 15 and closed at 38.90 reais or
21.95 dollars per 60-kilo bag on July 15. The ESALQ/BM&FBovespa
Index for the product delivered at Paranaguá port upped 4.87 percent
during the same period and closed at 41.55 reais or 23.45 dollars
per 60-kilo bag on Jul. 15.
Data from Secex (Foreign Trade Secretariat) estimates that soybean
prices in dollar in the first week of July were 44 percent higher
than the daily average of June and 53 percent higher than that
observed in July 2009. If this average remains during the month,
soybean exports of Brazil should again hit the record observed in
2009.
(Cepea – Brazil)
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Corn
16 July 10
Prices keep downward trend,
harvest moves ahead
In the first fortnight of July, corn prices in the domestic market
remain low due to advances in harvesting activities. Moreover,
sellers expect exports to take off in the next weeks favored by
governmental interventions and increases of international prices. In
the Central-Western region of Brazil, growers were also facing
difficulties in terms of lack of room in warehouses.
During Jun. 30 and Jul. 15, the ESALQ/BM&FBovespa Index for corn
(Campinas-SP region) decreased 2.15 percent and closed at 18.34
reais or 10.35 dollars per 60-kilo bag on Jul. 15.
In general terms, governmental interventions have already helped
growers to flow more than 4 million tons of this 2009/10 crop. For a
while, however, no changes in prices have been observed in Paranaguá
port.
It is worth noting that, in 2007, when Brazil’s corn export soared
to roughly 12 million tons, wheat crops did not produce the expected
yields and shrank in many countries, driving purchasers to buy corn
from Brazil to be used as animal feed, which, in turn, bolstered
exports. In world terms, more than 18 percent of the wheat (122
million tons) is for animal feed. Agents expect a similar scenario
to happen this year.
(Cepea – Brazil) |
Soybeans
keep rallying towards 11 dollars per bushel. Given the
massive crops in Brazil, Argentina and soon to be ready USA,
I am impressed by the ability of soybean market to hold
these higher levels. Personally I would have thought we
would be nearer 8 dollars by now.
Brazil
producers are making planting decisions now. Last year at
this time the dollar was circa 2.20:1 and falling towards
1.80 by Christmas 2009. Producers bought inputs at 2.20 and
sold soybeans with the dollar at 1.80. It made it difficult
to lock in margins last year.
For
2011 KCL fertilizer is about US$ 510 a ton. A 0-18-18 is about
US$ 400 dollars a ton. This is much better than one year ago. If
we use an average yield of 45 sacs per hectare for 2011, the
breakeven price gets to be about R$26.00 per sac. This is about
US$ 6.60 per bushel. One needs to use about R$ 1200 per hectare
including land costs for cash flow purposes.
