Soybean prices rose sharply on forecasts of a new heat wave in Brazil
In the central regions of Brazil, where dry weather persists, a new heat wave of over 35 o C is expected this week, which will negatively affect soybean and corn crops.
Against this background, November soybean futures rose by 2.6% to $502.7/t (+6.2% for the month), and January futures rose by 2.6% to $508/t on the Chicago Stock Exchange yesterday. (+5.9% for the month).
Rains from the south are forecast to spread to the central states over the weekend and the situation will improve. According to Safras Mercado, as of November 10, soybeans in Brazil were 57.1% planted (67.3% last year), as farmers waited a long time for favorable rainfall.
The AgRural agency lowered Brazil's 2023/24 soybean harvest forecast by 1.1 million tons to 163.5 million tons (157 million tons in 2022/23 FY) due to irregular rainfall and heat in the main producing state of Matu. Gross At the same time, in case of unfavorable weather, the harvest forecast in November may be reduced once again.
Currently, about 40% of Brazil's regions suffer from a lack of precipitation and intense heat.
In addition, soybean quotations were supported by China's increased purchases of soybeans from the United States, which is a step to improve relations between the countries ahead of the leaders' meeting, which will be held on November 15. China bought 3 million tonnes of US soybeans last week, but traders believe some of the deals could be canceled if Brazil's weather improves.
According to the USDA, in the new season, the US exported 14.03 million tons of soybeans out of a forecast of 47.8 million tons. This is 6% lower than last year's export rate, which amounted to 54.2 million tons in the 2022/23 fiscal year. Currently, soybeans in the United States are harvested on 95% of the area compared to the 5-year average of 91% on this date.
The weather in central Brazil in the next two weeks will be decisive for the future soybean harvest, but panic in the market is so far restrained by favorable conditions for sowing in Argentina, where 8% of the area is already planted with soybeans.
