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Soybeans: Without a China vs. US Agreement, Premiums Should Rebound Strongly in Brazil

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It seems very repetitive, but the fact is that the trade war between China and the United States remains the main factor of attention in the soybean market. In Brazil or in the external scenario, statements from both sides have had the strength to influence the market quite aggressively in recent months and a possible solution to this problem is expected to arrive in only 10 days.

Donald Trump and Xi Jinping will meet at the next G20 summit in Argentina between November 30 and December 1, and until then, “no other factor is greater than the commercial war”, explains the agribusiness consultant of Terra Agribusiness, Ênio Fernandes.

As long as a definition is not made, the prices and the soybeans are the most affected, as the business have lost strength and direction since the dispute began. In Brazil, although the result has been very positive up to now – with the Chinese focusing on their demand here and the country hitting record export volumes – only in the last month the premiums paid in Brazilian ports fell more than 30%.

At the Paranaguá terminal, the November and December / 18 positions lost 39.92% and 38%, respectively, to US$ 1.55 per bushel over the value of Chicago, against US$ 2.58 and US$ 2, 50, 30 days ago. February went from US$ 1.35 to US$ 1.00 / bushel, down 25.93%, while March / 19 was at S$ 0.70, compared to $ US1.00 a low of 30%.

The most intense retreat of the Brazilian premiums came after speculation that Trump would soften the tone over the talks with China and guaranteed that he wanted soy in any deal that was signed with the Asian nation.