Can soy exceed the $ 500 barrier in Chicago?

Can soy exceed the $ 500 barrier in Chicago?

Specialists considered that the Chinese demand and the development of the bean agricultural cycle in Brazil and Argentina will be decisive for the evolution of international prices.

Publication date: December 14, 2020, 12:52 p.m.

The United States Department of Agriculture (USDA, for its acronym in English) last week cut the production estimate of the oilseed in Argentina by one million tons. Expect a harvest of 50 million tons. Photo Adobe Stock.

Although the price of soybeans on the Chicago international market is currently below $ 430 (last Friday it closed at $ 427 per ton), the strong increases in recent months and the upward trend that maintains the oilseed generate price expectations that exceed $ 500.

/ Grain market: the price of soybeans, corn and wheat for Friday, December 11

For professionals, this situation can materialize, but it will depend on key factors such as demand from China, and the climate and 2020/21 production in South America.

It is worth remembering that the crop is in full sowing in our country, in a context where the lesser amount of rains than normal slows down the implantation work.

Bean price on Friday, December 11. Photo: Canal Rural.

Sebatián Olivero , a market analyst, explained that there are still some issues to be defined regarding the world scenario of the oilseed price. “The road is long and there are several tensions between supply and demand that could make stocks have this path: it is very difficult to know how far and if the price is really going to reach $ 500. To achieve this value, there should be a serious problem in South American countries and we hope that this will not happen ”, said the specialist in dialogue with Canal Rural.

But he explained that the United States in less than three months placed between 86% and 87% of all its exports projected by the United States Department of Agriculture (USDA, for its acronym in English), while Brazil has already sold almost all its exports. commodity.

“Of course the price rise is not a constant because the market comes and goes, but there is a potential for upward volatility events because the stocks in the United States are very tight, ” he stressed.

For his part, Diego de la Puente , from the Nóvitas consulting firm, explained that, on the one hand, genuine demand must be observed, which is that of China, and on the other, that of hedge funds, which drive prices.

“There is a third variable, seasonal, which is the weather . The projections for South America regarding soy are record, ”explained the analyst, and highlighted that this factor generates expectations in the market.

“If that harvest that is estimated as a record tomorrow is a setback, the price will probably reach $ 500 and exceed it . The pivotal factor, which is the weather, will play a fundamental role in the formation of the price of soybeans, ”he said.

The determining factor: South America

“For soy to reach $ 500 in Chicago there has to be a productive failure in the southern hemisphere,” explained market analyst Enrique Sarthés to Canal Rural.

“Although there are doubts as to the delay of the harvest in Brazil and the yields of that country and also those of Argentina, I do not think that for now the soybean will shoot above 500 dollars,” he added.

Last week, the USDA in its report on world supply and demand for grains for December r cut the estimate of soybean production in Argentina by one million tons to a final harvest of 50 million. With respect to Brazil, the projection was stable compared to last month’s measurements at 133 million tons.

Worldwide, the forecast for bean production was reduced from 362.6 to 362.1 million tons and the final stock from 86.5 to 85.6 million tons.

Meanwhile, national specialists considered that the development of the agricultural cycle of the crop in Brazil and in our country will be decisive for the evolution of international prices.

Juan Manuel Niveyro

Movil: +54 9 3624 725988 (WhatsApp)

Skype: niveyro1

Barranqueras – Argentina