December 7, 2020

After Record Highs, Soybean Prices Declining in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

After reaching record highs several weeks ago, domestic soybean prices in Brazil have declined as much as 20% in some locations over the past 30 days.

One of the main reason for the decline has been the strengthening of the Brazilian currency in relation to the U.S. dollar. From November 3rd to December 3rd, the Brazilian currency strengthened (or the dollar weakened, either way you want to look at it) more than 10% from 5.75 reals per dollar to 5.13 reals per dollar. One of the reasons for the stronger currency was good news concerning the Brazilian GDP which grew 7.7% during the third quarter. Some of the recent changes in domestic soybean prices over the past month in Brazil include:

  • Sorriso, Mato Grosso - R$ 175 per sack to R$ 140 ($15.00 to $12.00 per bu) -20%
  • Tangara do Serra, Mato Grosso - R$ 160 per sack to 158 ($13.72 to $13.55 per bu) - 1.7%
  • Sao Gabriel do Oeste, Mato Grosso do Sul - R$ 170 per sack to R$150 ($14.57 to $12.86 per bu) -11.7%
  • Jatai, Goias - R$ 156 per sack to R$ 145 ($13.37 to $12.43 per bu) -7%
  • Castro, Parana - R$ 160 per sack to R$ 147 ($13.72 to $12.60 per bu) - 8%

There has also been less interest on the part of buyers to bid up remaining available soybean supplies. Many industries have already closed down for the end of the year while they wait for the new crop soybeans. New crop soybeans should start trickling onto the market starting about January 10th, but the soybean harvest probably won't enter full swing until the end of January. The price of soybeans at Brazilian ports is in the range of R$137 to R$ 140 ($11.74 to $12.09 per bu).

There will be strong demand from feed manufactures for the first available soybean meal due to the expanding livestock production. There will be a high demand for soybean oil to produce biodiesel which will go from 12% vegetable oil blend (B12) to 13% vegetable oil blend (B13) in March. Soybean oil constitutes about 80% of the vegetable oil used to produce biodiesel.