US soybean area surprises and market gets busy in Chicago

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         Porto Alegre, April 5 2021 – After a month with a few deals and regional price swings, the Brazilian soybean market was surprised on the last day of March. The long-awaited planting intentions report from the United States Department of Agriculture (USDA) surprised by indicating an area far below the market expectations and sending CBOT futures sharply higher.

         The surge in futures contracts also raised domestic prices, and the movement gained consistency on Wednesday (31). Chicago ended at the day’s limit up of 70 cents a bushel, equivalent to more than 5%.

         According to the USDA’s report, the area to be planted with soybeans in the United States in 2021 must occupy 87.6 million acres. If confirmed, the area will be 5% above last year’s.

         Despite the significant growth, the number was below the market expectation, which was 89.99 million acres. The number also came below the area of 90 million acres indicated at the Department’s annual forum, held in February.

         As a result, the May contract, the most active, reversed the losses it had accumulated over the month and closed March 2.31% higher. In the quarter, gains hit 9.95%. The dollar, another important point of formation of domestic price, rose 0.48% this month and 8.48% in the quarter.

         In general, the Brazilian soybean market trading was very restricted last month. With the excess of rain, growers focused their attention on the harvest and left business aside. Prices fluctuated too much during the period, hindering the return of agents to negotiations. While Chicago and the exchange rate continued to provide support, the seasonality of the arrival of a new record crop began to weigh on Brazilian prices.

         In Paranaguá, a 60-kg bag rose to BRL 175.00 on the 31st, the date of the USDA’s report. At the beginning of the month, prices were at BRL 171.00. In March, a bag reached BRL 180.00. Prices have been soaring since the year’s start. In Paranaguá, in early 2021, they were at BRL 151.00. In the first three months of the year, prices rose by more than 15%.

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