In the case of soybeans, it is also added the strong demand that exists in the soybean oil market and the optimism about the demand for oilseed exports in the United States, according to analysts.
“U.S. soybean export prices are competitive with Brazilian supplies for May and cheaper than Brazil for June, July and August,” Arlan Suderman, chief commodity economist at StoneX, wrote in a note to clients.
This day, meanwhile, corn advanced 1.3% to US$320.86 a ton, while wheat fell 1.2% and was trading at US$399.12 in May contracts.
The analysis and consulting manager of FyO, Dante Romano, explained that the grain market is currently looking at three fundamental questions: the drought in South America and its effects on a harvest that is still going on; the war in Eastern Europe; and uncertainty regarding North American production.
In the case of the lack of rains that afflicted Argentina, Brazil and Paraguay -which impacted the production of soybeans and corn with cuts that are still ongoing-, Romano said that “those losses have already been discounted by the market.”
The issue now focuses on the war between Russia and Ukraine, which is one of the main factors that continues to impress strong volatility in the grain marketsince in the latter country “it is impossible to ship 15 million tons of corn, a lot of wheat and sunflower oil.”
“There the question is whether once the conflict is over, said merchandise will be able to be shipped quickly or not. Another point of doubt lies in the fact that at this time corn and sunflower and spring wheat should be planted, and there are estimates that speak of a drop of up to 50% in productionin addition to the lack of supplies, labor and that there are occupied territories,” warned the specialist.
Finally, the third component that guides prices “It is the soybean and corn campaign that is beginning in the United States, as well as that of winter wheat”.
In the case of the latter, there are batches that present the “worst quality of the last 26 years”while for the sowing of coarse grains “a larger soybean area is expected to the detriment of corn, due to the rise in the price of fertilizers.”
With a more focused vision, the head of the Market Analysis Department of the Grassi brokerage, Ariel Tejera, focused his attention on the Russian-Ukrainian conflict.
“When analyzing the war, multiple edges and impacts on the markets can be highlighted. To begin with, in the short term, it generated interruptions in shipments and in the availability of merchandise, negatively affecting supply. Meanwhile, towards the medium term, a effect on planting decisions in Ukraine, with a reduction in area that could reach 40%,” Tejera pointed out.
“Given the extension in time, a share of uncertainty is added to the markets, regarding the outcome and when the scenario in the Black Sea region will normalize. The end is still open,” he added.
For his part, the market analyst Carlos Etchepare considered that “the market will continue to be very volatile”due to the combination of the effects of the pandemic with that of the war.
“This combination has greatly revitalized the value of food as a strategic issue and that has made the world stock up on food based on a change in policies in those more protectionist countries, such as the United States or the European Union, anticipating that they may lack food,” he said.
“In this context, prices are going to remain firm. However, this does not mean that they are going to continue rising. Current prices are already very good and what you have to think about is that demand has a payment capacity limit. Perhaps we are close” to the end of the uptrend, Etchepare concluded.
Source: Ambito
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