Exchange rate and external demand heat up the soybean market

The April report from the United States Department of Agriculture (USDA) brought only specific adjustments to global soybean supply and demand figures. In China, stocks, which had reached their lowest level in three years, have grown again in recent weeks and are expected to continue rising until the end of the third quarter.

The appreciation of the premium and the rise of the dollar boosted sales in Brazil, with significant growth in sales. The combination of strong demand and the need to pay production costs, such as inputs, has led producers to take advantage of market opportunities, amid high interest rates and more restricted credit.

In its latest update, USDA raised global soybean ending stocks by one million tonnes, now estimated at 122 million tonnes. For the United States, the export forecast was maintained at 49.7 million tonnes, while ending stocks were slightly reduced, from 10.3 million tonnes to 10.2 million tonnes.

Projections for Brazil and Argentina remain unchanged, with production estimated at 169 and 49 million tons, respectively. Brazilian domestic consumption, however, was adjusted upwards, rising to 61.1 million tons, with crushing increasing to 57 million tons.

Shipments from Brazil have started to arrive more intensely in China, increasing inventories at ports and factories. With positive crushing margins and a robust lineup for April, shipment volumes are expected to remain high in May and June as well.

China's strategy is to maximize purchases from Brazil in the first half of the year, reducing dependence on American soybeans in the second half of the year. Chinese stocks are expected to peak in September, before the start of the U.S. export season.

With a new round of financial maturities in May and the good performance expected for the second corn crop, the pace of soybean sales in Brazil should remain firm in the coming weeks.