The 5 Relevant Factors of the Current Soybean Market

Based on the current soybean market and expert opinion, it is very likely that we will see an increase in soybean purchase and sale prices for the next 7 months. And we must take into account at least 5 important factors for this to occur:

B11 Approval: With the approval of B11 by the federal government, Biodiesel companies will increase consumption by 1% of the purchase of the main raw material (crude/degummed soybean oil);

Trade tension between the US and CHINA: These giants of the global economic scene have not closed any agreement so far and China will probably increase its purchase of soybeans from South America (Brazil and Argentina);

Brazil off-season: The Brazilian soybean off-season occurs from September 2019 to February 2020. Historically, during this period there is a shortage of product, leading to an increase in the prices of all soybean derivatives;

Mercosur and European Union Agreement: If the agreement is approved, European countries will be able to increase their purchase of pork and poultry from Brazil, remembering that one of the main inputs for the feed of these animals is soy (both bran and crude oil);

Unfavorable Weather USA Harvest: The US is in the middle of a harvest season, but there is an estimated crop failure due to unfavorable weather conditions for planting and harvesting. For now, there are no exact figures for this loss, but even if a trade agreement is reached between the US and China, it will not be enough to supply the Chinese market.

With these factors in mind, it is important to take precautions by planning in advance to avoid greater costs later on.

Source: Danilo de Lima – Aboissa Commodity Brokers
Image credits: Gerd Altmann