International soybean and wheat prices drop 5% and 12% in the last 15 days

The persistent decline in prices for the so called Argentine “soybean complex” has three main causes:

Brazil’s record soybean production

A good start to soybean crop sowing in the USA

The possibility of a new extension in the agreement that assures safe transport of Ukrainian grains through the Black Sea.

According to Tejera, the neighboring country could reach a record of 153 million tons of soybeans. Therefore,in conjunction with Paraguay, these two countries could offset the losses suffered by Argentina. Such losses are estimated to be more than 19 million tons, when compared to last season. “The world has soybeans and that brings calm to the markets,” the specialist added.

On the other hand, Tejera explained that operators from the world’s reference stock market, are pondering the productive scenario of  the USA’s new soybean campaign.

“At the local level, the international context has started to be felt. Influencing prices and conditioning the pace of the business,” said Tejera. Despite the current validity of the so-called agro dollar,there is a differential exchange rate of 300 pesos. “FOB prices for by-products have dropped, hampering the paying capacity of factories. This situation, together with: a sharp increase in stock exchange rates, futures positions and the impending shadow of devaluation, have contributed to paralyze activity within the domestic market,” he concluded.

Meanwhile, Ivan Vacilievich an analyst for the Department of Information and Economic Studies of the Rosario Stock Exchange, calls for more attention to be placed on the negotiations between Russia and Ukraine. As he considers this to be an important factor,which is conditioning prices.

Vacilievich stressed upon the need to “closely look at how negotiations are progressing.” He also said, “we must see how crops evolve in the US. For now they look to be doing well, and the weather has been good, but we will have to see how this develops. ”

In the case of cereals, the drop was more pronounced. Thus, from mid-April up until now, the price of wheat fell from USD 256.65 to USD 227.71 per tonne. Which is equivalent to a 12% drop or  28.91USD less. Meanwhile corn dropped 6% (USD -16.60) reaching USD 250.39 per ton.

FyO specialist Mariela Brandolin,  explained that the main reason for the decline in wheat prices had to do with: “Russia exporting at very competitive values which has created downward pressure on prices.” “In any case, we will have to wait for how the new harvest of the northern hemisphere develops. As it is currently coming out of its hibernation period. In the case of the United States, we know that crop conditions are very poor.” she said

As for corn, Brandolin believes that “the international scenario is similar to that of soybeans and even worse. Considering that the United States projects a significant growth in planting area and sowing is progressing smoothly. On the export side, not only are they being relatively slow, but China has been canceling some purchases from the United States in recent days,” stated the expert.

“Brazil, on the other hand, is doing very well with its safrinha crop, and it is also exporting its available corn at very competitive prices.  I think that the only factor that could reverse the downward trend at the international level,  would be a climate problem in North America or that Russia cuts the humanitarian corridor agreement.However, this is complete speculation and there are no clear signs of that happening.”concluded Brandolin.

Source: www.infobae.com

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