Porto Alegre, February 23, 2021 – Premiums at ports ended up accentuating a negative inclination, assuming features of crop arrival. The market reflects the progress of the Brazilian harvest and the expectation of an increase in internal physical availability, which has even led to short-term distortions, with Brazilian soybeans bidded in Paranaguá at -5 cents a bushel, against offers at +15 cents.
The reference is better for shipments from April, due to the increase in physical availability. For April/May positions, Brazilian soybeans are trading on FOB Paranaguá between +16 and +24 cents/bushel against the CBOT. It is good to remember that in January that same description changed hands at +80, and at the beginning of the crop in 2020, at its worst moment, it did not fall below +33 cents.
The fall in the premium is justified by the pressure of the record crop and the dollar at still high levels. This led the export basis to converge towards its normal historical trajectory at crop arrivals, which ranges from +10 to +30 cents/bushel.
The weakening of the export basis left Brazil very competitive in the international market. While the premium in Brazil ranges from +16 to +24 cents, in Argentina it is indicated at +104 cents, and at the Gulf of Mexico, in the United States, at +73 cents. This Brazilian advantage must attract demand, justifying the expectation of much more aggressiveness by China here over the next few weeks.
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