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May 8, 2014

 

Brazil's soymeal and grain prices continue to rise on strong demand
 

 

Brazil's soymeal and grain prices both in the domestic and international markets continue an upward trend attributed by its demand, according to Brazil's Centre for Advanced Studies on Applied Economics (CEPEA).

 

Soymeal consumers in world terms seem to be willing to buy, accepting higher quotes of this by-product. As a result, processing activities of the grain also increased. Therefore, the scenario for sellers is not better because soyoil prices have been pressed down by the higher volume of palm oil in stocks.


At Chicago Mercantile Exchange (CME) Group, average quotes for soy grain in April, considering the first due date, reached the highest value since July 2013. As for soymeal, the monthly average was the highest since September 2012. In relation to soyoil, the average was the highest since September 2013.


As a result, soy grain quotes are underpinned by soymeal rises. Considering data from April 30 of futures contracts at CME Group and an industrial yield for each tonne of soy grain of 78% of soymeal and 19% of soyoil, from the total revenue of the industry, 71% would come from the soymeal and 29% of the soyoil. These are record values. In late April 2013, the relation was 64% of the revenue coming from soymeal and 36% of the soyoil.


Concerning international trades, soy grains and soymeal shipments from the US are at a growing and record pace. Until mid-April, the US exported roughly 42 million tonnes of the grain, against slightly more than 36 million tonnes in 2012-13. As for the soymeal, shipments already surpassed 7.6 million tonnes, 6% more than the volume shipped in the same period of the crop before. Referring to soyoil exports, the volume is at 550,000 tonnes, 27% lower than in the same period of 2012-13.


While the demand for soy grain and meal comes from China, pressures on sales and soyoil prices are related to both higher production and ending stocks of palm oil. Between 2009-10 and 2013-14 crops, the production of palm oil rose 27%, while the soyoil production increased 15%. However, the demand for palm oil has not increased in the same intensity, leading ending stocks to move up 38% in the period, representing 13% of the demand. As for soyoil, ending stocks reduced almost 4% between 2009-10 and 2013-14 crops and account only for 7.3% of the demand.


In the domestic market, players are focused on prices in the upcoming months. Producers indicate that sales stepped up, but the supply might be smaller than that estimated officially. In Mato Grosso, the Institute of Agricultural Economics of Mato Grosso (IMEA) points to 71% of the production of the state already traded, while in Paraná, Deab/Seral indicates that 53% have already been traded.


The ESALQ/BM&FBovespa Index for the soy delivered at the Paranaguá port moved up 1.36% in April, closing at BRL71.46 (US$31.99) per 60-kilogramme bag on April 30.


As for the CEPEA/ESALQ Index for soy (Paraná state – reference for trades in Brazil), the increase in the accumulated of the month is 2.78%, closing at BRL69.11 (US$30.94) per 60-kilogramme bag in the last day of April.
 
 
Source: CEPEA/ESALQ
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