Image: Pixabay
Soybean producers in Brazil are holding back on sales as they believe prices could rise further amid tightening global supplies, said brokers, buyers and sellers in the country, the world's biggest producer and exporter of the oilseed.
Another reason for the “hoarding” of production is the fear that the La Niña climate phenomenon could limit the next harvest in South America, according to producers and brokers.
They also cited the increase in domestic political tensions, which could weaken the real in the coming months and justify sales at a future time.
Farmers hope to force exporters and the local processing industry to pay more for soybeans. This, in turn, could boost global food inflation, causing soybean and corn prices – which already reached eight-year highs in 2021 – to rise even further.
In states such as Rio Grande do Sul and Paraná, producers still have 12.4 million tons of soybeans from the 2021 harvest to sell, as estimated by consultancy Safras & Mercado at the beginning of August. This represents around half of the almost 25 million tons of the 2021 cycle not yet sold.
Luis Fucks, a farmer in Rio Grande do Sul, said producers are not in a rush to sell and expect prices to reach $14 per bushel.
Décio Teixeira, from the same state, stated that some producers are waiting for prices to return to around 170 reais (32.85 dollars) per 60 kg bag before closing deals again, adding that they kept a large portion of their production to negotiate later.
{module Form RD}
La Niña usually brings dry weather to South America.
“Nowadays it seems that having grain in your hand is safer than having a coin,” said Teixeira.
Iuri Gomes, from the Paraná brokerage Origem, said that soybean stocks in the South region are higher than expected. According to him, local soybean processors are willing to pay more than export markets for the oilseed. Higher domestic premiums would be the only way to convince producers to accept buyers' offers, he said.
This scenario could limit the volume of soybeans that Brazil will export to China, its main buyer. This month, the government reduced its estimate for soybean exports in 2021 to 83.4 million tons.
After years of an excess supply of grains in the world, Brazilian farmers managed to capitalize on rising prices, which began to rise in the second half of 2020 due to concerns about harvests in the United States and South America, in addition to strong demand. from China.
“The producer is still happy, with all the bills paid,” said Gomes. “The producer is watching the market kill itself trying to take the grain from him.”
In Rio Grande do Sul, one of Brazil's largest soybean producers, producers had sold 62% of the 2021 soybean harvest by August 6, 11 percentage points below the historical average for the period, according to data from Safras&Mercado. In Paraná, sales reached 78%, two points below the five-year average.
The two states are expected to harvest 42.2 million tons of soybeans together in 2022, but only around 12% of the future combined production has already been sold in advance, also below the historical average, Safras said.
In August last year, Rio Grande do Sul had already sold 27% of its future harvest, while sales in Paraná reached 45%.
Source: Crops & Market
