Safras analyst: Although the rain may lead to a correction in soybean prices, the trend is still bullish
Foreign media, January 17: The soybean market has been concerned about the weather conditions for the development of new crops in South America, which have encountered major problems in recent weeks, said Luis Fernando Gutierrez Roque, an analyst at consulting firm Safras. . In addition, market participants are also paying attention to the trend of soybean demand in China. In addition, the world economic situation and the progress of the Omicron epidemic around the world have also attracted the attention of financial markets.
The outlook for South American new bean production remains the focus of international markets. La Niña climate issues affect key producing areas in Brazil, Argentina and Paraguay. In Brazil, soybean crops in the states of Parana and Rio Grande do Sul were negatively affected by dry weather. Soybean yield potential lost at least 30%. As farmers in the state begin harvesting soybeans, Locke believes yield losses are largely a foregone conclusion. In Rio Grande do Sul, although lack of moisture also negatively affected soybean growth, losses may be reduced if precipitation improves in the coming weeks due to the relatively late planting of soybeans in the state. Overall, soybean yield potential in both states will continue to deteriorate if dry weather persists in the coming weeks. So far, Safras has lowered its forecast for Brazil’s soybean production from 144.7 million tons to 132.3 million tons, indicating that the problem is quite serious.
Rainfall over the next 10 days, as the climate map shows, could be important to prevent further yield losses. But Rio Grande do Sul will have to maintain wet weather throughout February, which is not what the forecast suggests.
In Argentina, the situation is similar to that of Rio Grande do Sul. There is a lack of moisture in the main producing areas, so it is necessary to replenish moisture in February so that the loss of production will not be further expanded. Rain in Argentina and southern Brazil over the next few days may provide room for a correction in prices. But we understand that the soybean market still tends to rise.