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March 4, 2019

Soybean Premiums and Prices Move Higher in Brazil

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

The strong demand for Brazilian soybeans continue to push premiums and interior prices higher according the consulting firm Cogo Inteligencia em Agronegocio. At the Port of Paranagua the premium for March deliveries increased from $0.40 a month ago to $0.52 per bushel above Chicago. For May deliveries, the premium increased from $0.45 a month ago to $0.58 per bushel above Chicago.

Last week at the Port of Paranagua soybean prices were R$ 78.00 per sack for immediate delivery (approximately $9.45 per bushel) and R$ 78.50 for March delivery (approximately $9.51 per bushel). At the Port of Rio Grande, the soybean price was R$ 77.30 per sack (approximately $9.36 per bushel) for immediate delivery and R$ 77.80 for March delivery (approximately $9.43 per bushel).

Premiums bottomed out between December and January at the Port of Paranagua and as each month passes, they continue to move higher. For July delivery they are $0.75 to $0.78 per bushel above Chicago. Prices in the forward months are moving higher as well with May and June in the range of R$ 84.00 to R$ 85.00 per sack (approximately $10.18 and $10.30 per bushel).

The demand for Brazilian soybeans is strong given the smaller crop and the strong demand from China. Brazil exported almost 85 million tons of soybeans last year, but given the smaller crop, shorter carryover, and increased domestic usage, exports may be down to 70 million tons in 2019.

Most analysts feel this is a clear sign for higher domestic prices going forward. Brazilian farmers hear this of course and as a result, they are reluctant to sell their 2018/19 soybean crop in the hope of higher prices going forward.