The price of soybeans it shoots this Monday, May 6, in the Chicago market, pressured by the expectation of a fall in Brazil’s harvest, amid heavy rains and flooding in Rio Grande do Sul.
The scenario for the soybean harvest of Rio Grande do Sul, which was on track to be the second producing state in Brazil in the 2023/24 season, is deteriorating due to the rains, and sector sources cited potential losses of between 10% and 15% of expected production.
Thus, The value of the oilseed climbed 1.9% to US$450.1 per ton, a maximum value since last January. In turn, corn gained 2.4% to $180.21, while wheat increased 3.4% to $236.72.
The Cotrisal cooperative of Rio Grande do Sul estimated a drop in the soybean harvest to around 19 million to 20 million tons, as about a quarter of the planted area had not yet been harvested before the rains, Leandro da Silva, manager of the grains unit, told Reuters.
Cotrisal’s figures are below the 21.89 million tons forecast by the state-owned Conab for the Rio Grande do Sul harvest before the meteorological tragedy. Emater, the state technical assistance agency, had estimated production at 22.25 million tons.
The news from Rio Grande do Sul supported futures contracts on the Chicago Stock Exchange, as the rains are likely to reduce the expected production volume in Brazil, the largest producer and exporter of soybeans.
Analysts estimate that the state has about 5 million tons of soybeans “at risk” due to flooding, but they believe potential losses could be smaller, between 1 and 2 million tons. “In the most affected regions (…) from the center of the state to the south of the state, I estimate that there could be between 30% and 40% of the area to be harvested,” said Hedgepoint Senior Relationship Manager Eduardo Tres.
Based on this, the analysis company estimates that The state still has five million tons to harvest in risk areas, but potential losses would be up to two million tons, indicated Alef Dias, grains and macroeconomics analyst at Hedgepoint.
In addition to the problems for the harvest, infrastructure, energy distribution and transportatione, the rains have caused the death of at least 31 people, in addition to leaving dozens missing, according to Civil Defense data.
Although at the moment it is difficult to estimate the exact losses, among other things because many areas are under water, there is already consensus among analysts that Brazilian production will be lower than expected. “It is too early to talk about figures, but yes, we are going to cut part of the production of Rio Grande do Sul. We can say that between 4 and 5 million tons are at risk,” said Safras & Mercado analyst Luiz Fernando Roque.
According to AgRural analyst Fernando Muraro, “the market will soon discover that the Brazilian harvest is moving away from 155 million tons” estimated by the United States Department of Agriculture (USDA).
AgRural had already estimated a lower figure, 148.5 million tons, which should be revised downwards, while Safras & Mercado had raised its projection for March to April to 151.3 million tons, with a positive bias.
Source: Ambito
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