Cereal Market: Storm at the door with soy?

The sales structure of the producer has changed and is the product of the circumstances. We must also consider that it is obvious that all the years are not equal. The first surprise was wheat, with a record production of over 21 million tonnes and a consolidated harvest price in the low of 200 USD per tonne, with peaks of 215 USD.

With this scenario of high yields and unthinkable prices, the producer does not hesitate and records record sales for a total accumulated volume during the first week of March of 11.52 mio / t, or 55% of the total production. Net dollar income of producers exceeded US $ 2.3 billion.

The second product sold is maize, although it has not yet been harvested, but the producer reasoned logically and adopted an early selling position, at a price of 1.71 / 1 maize / corn, it has never been better to sell corn. The sales affidavits at the beginning of March amount to 7.83 Mio./t, with income borne by the producer for 1100 million US dollars.

And finally soybean, with cumulative total sales exceeding just 2.1 million tonnes / ton and pocket revenue when harvest, delivery and collection take place, 515 million US dollars. Of the three sales already committed for a total amount of US $ 3,915 million, of which 59% is wheat, 28% is maize and only 13% is soya.

It is a fact to highlight in this campaign: the producer decided to earn money with wheat and corn and, in his collective imagination, he thought that the price of soybeans could increase. Well, the reality of the market tells us that the price has not improved. The bad news is that the price of soybeans can be even worse (will we see a new cap at $ 200 per tonne?).

And that's where we get to the heart of the problem, with sales of only 2.1 million tonnes per year and potential production of 53 million tonnes, leaving around 51 million tonnes to sell. We know that the producer at the time of harvest sells a percentage, which we badume is 25%, the first month, the volume of the offer in April will approach 11 million euros. This implies a weekly supply volume of 2.75 million tonnes and an average of 550,000 tonnes per day.

The key factor in this case is the overlap with the income of the corn crop. The producer will sell the corn and will want to deliver the soy to repair because it does not like the price and because all the soy can not be sold in export conditions. Beginning of history, sharp drop in soybean price available and conditions to be fixed with delivery guaranteeing a reduction with discounts on the board.

The author is founding partner of the Gurú market