Soybeans could not withstand the panic in world financial markets and also fell sharply this morning in Chicago; At 6 am (Brasília time), the three main maturities lost more than 13 points, with the bushel working below US$ 9 dollars, with May worth US$ 8.81. The trend is for a stronger fall throughout this Friday – heavy for all markets.
Cotton businesses record the worst losses. At the end of Thursday, cotton fell by 4.5%; now in the early hours of the morning the losses increased, with losses close to 3%, taking the pound weight of the feather to a value of 60 cents. Sugar followed a similar loss, with a drop of 2%, and the pound was worth 14 cents.
All commodities worked in the red in the early hours of the morning around the world, and the drops are happening now in the morning. The inflection point is oil, which has already lost the reference of US$ 50 dollars/barrel (Brent), and in the early hours of the morning it buried its price at 45 dollars. There is no product that is escaping the falls on the commodity exchanges.
The worst situation is in the financial world. Stock exchanges record losses on average close to 5%, a true global disaster. The news of the inevitable declaration of a pandemic caused by the coronavirus, by the WHO, is gasoline thrown on the fire of business on this difficult Friday morning.
ESCAPE THOSE WHO MADE HEDGE
The biggest losses are concentrated, however, in the financial market, as production, for the most part, works with hedging (selling = puts). In the case of Brazilian soybeans, producers have already sold (in futures) more than 60% of the 2019/20 harvest – either through advance physical sales or through the hedging system (via traders), or even through puts via options. From the 2020/21 harvest, around 10% has already been sold, with producers even taking advantage of good times for exchange relationships.
Even those who do not operate “locked down” are managing to escape the setbacks in the financial market by “bartering” for planting (the so-called exchanges, “packages”, at resellers and cereal companies). However, on the other hand, those who gave the guarantees and provided hedging and bartering of inputs (the traders, multis and banks) are sustaining huge losses.
This Friday, the collapse in prices will show the unwary that production is financial, that is, the value of food is measured by its currency value. On the other hand, even gold (investors' refuge in difficult times) cannot resist the panic and is also working in the red.
There is nowhere to escape, except to wait for news of scientific solutions that stop the spread of the coronavirus.
Source: Notícias Agrícolas
