The price of soybeans surpassed US $ 500 in Chicago and reached its highest value since 2014

01/06/2021

The main causes for this rise, which reached 2014 values, are the tight global supply and the lack of rainfall in Argentina. By-products of soybeans, such as oil and flour, accompanied the positive trend.

The price of soybeans finally exceeded US $ 500 in the Chicago Market and closed the day at US $ 501.64, an increase of US $ 5.60 compared to the day before, reaching its highest value of the last six and a half years.

In this way, the price of the oilseed maintains the upward trend that began more than five months ago, in which it accumulated a 55% increase in its price -adding more than US $ 178.62- and around 40% at the same time. throughout 2020 .

Indeed, at the beginning of the day, soybeans reached values ​​above US $ 505, reaching its highest price since July 2014.

With the passage of hours, it began to trade for US $ 503.94 and finally closed the day at US $ $ 501.64.

The Rosario Stock Exchange (BCR) indicated that the fundamentals of the rise again lay in “concerns regarding global supply as the lack of rainfall is noted in the main producing regions of South America, particularly in Argentina” and Brazil.

Speaking to Télam, the analyst of the Buenos Aires Stock Exchange (BCBA), Juan Pablo Giana, said that “the world market and, in particular, the United States are with the lowest stocks since 2013 to a great extent due to the strong Chinese presence that has been recovering economically and demand to supply its pig production “.

“Whenever the dollar weakens, US exports become more competitive. In addition, it makes hedge funds position themselves as buyers in the market, increasing the variability of the price increase,” added Giana.

In coincidence, the head of the Market Analysis Department of Grassi SA, Ariel Tejera, observed that “the revaluation of assets and commodities works as a counterpart to the loss of value” of the US currency.

The upward rally of the oilseed began at the end of August last year and, despite some intervals, has continued to date.

Indeed, the arrival of the coronavirus pandemic at the end of March occurred in a context in which the global economy was already plunged into a deep crisis, which also determined that the commodity markets were hit by uncertainty and the fall of the activity.

In this framework, from March to August, the price of soybeans was within a range of between US $ 300 and US $ 320 per ton and then began to rise with the rebound in world activity.

In this way, in the last five months the price of the oilseed grew by 55% (US $ 178.62), if one takes into account that on August 6 of last year, the closest position of soybeans closed to the US. $ 323.62.

If the positive dynamics continue, it would be good news for Argentina in general – since it would increase the inflow of foreign exchange – and for the agro-export complex in particular.

Due to the rise in commodity prices, in 2021 the Argentine agribusiness sector will contribute foreign exchange for about US $ 31.1 billion, US $ 4.6 billion more than this year (17%), according to a report by the Mediterranean Foundation.

In this regard, Giana pointed out that for the country “the immediate positive impact would be related to higher foreign exchange income, higher collection (mostly due to export duties, but more value added from the chain is also generated and increased collection due to other taxes). “.

“It also generates an increase in the margin for producers, if it is sustained over time,” said Giana, estimating that the upward trend will continue in the short term, which will allow greater investment possibilities for the coming season.

“The only factor that could correct in the short term would be movements of hedge funds, sudden sales to recover profits. However, the world supply is limited and for this to be corrected we must wait for the next campaign,” concluded the analyst of the BCBA.

Tejera agreed that the global scenario is likely to remain that way due to strong demand from China, but was cautious about local production, warning that “the South American supply is not in optimal conditions.”

“The climate is one of the main questions, leaving an open end to the volume that will finally be contributed by Argentina and Brazil,” the specialist completed.

Meanwhile, in the local market of the Rosario Stock Exchange, contractual soybeans closed with a rise of $ 5 to reach $ 29,225, thus continuing the upward trend of recent weeks.

Finally, the president of the Argentine Soybean Chain Association (Acsoja), Luis Zubizarreta, told Télam that the strong rise in soybeans “is an opportunity for Argentina but it is also a consequence of the dry climate and what is important to be able to To take advantage of prices is to have a good production and therefore that it rains “.

“We have to increase production by removing some disincentives that currently exist that do not allow us to take full advantage of this favorable situation, we have stagnant production 10 years ago, while Brazil had a significant increase in the same period,” added the business leader.

“It is time to increase production, add value and export more to generate more quality employment,” concluded Zubizarreta.

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