Grain and Soybean Prices Witness a Meteoric Drop in South America
- 06-Dec-2022 12:25 PM
- Journalist: Jacob Kutchner
South America: The excellent weather in South America and the anticipated increase in Brazilian maize production caused Soybean and Grain prices to decline overnight. Additionally, during the initial days of December 2022, rainfall increased in some areas of Brazil, alleviating looming rain shortages in nearly a third of the nation's Soybean and Grain-growing regions, according to research by Commodity Weather Group. The precipitation further helped to reduce moisture shortages in nearly half of the regions that produce sugar.
According to a study from the U.S. Department of Agriculture (USDA), corn and other Grain production in Brazil has increased to 126 million metric tonnes, an 8.6% increase from the previous year. Forty-seven million metric tonnes of Grain exports are anticipated, upto 2.5 million tonnes annually. According to USDA projections, Brazil's wheat production would climb by 21% from last year to 9.4 million metric tonnes. According to the research, this estimate is supported by Brazilian farmers' ongoing interest in the robust global market for Grain and growing commodity prices. All these reasons have boosted the production of Grains and Soybean oil, thus leading to a decrease in the price of the commodities.
While sunflower oil prices continued to fall, Soybean oil prices fell overnight during the first week of December 2022. Sunflower oil typically trades at a premium to its Soybean-derived competitor, but now it is trading at a discount, according to the International Sunflower Association; this is fuelling the demand for sunflower oil. The reduction might encourage consumers in markets like Asia and Europe to buy more sunflower oil in the upcoming months.
Recently the weaker dollar, which fell another 0.4% to reach its lowest level since mid-August, is supporting prices. Foreign consumers can now acquire dollar-denominated items like American agricultural products at lower prices backed by the weakened dollar.
The ChemAnalyst database predicts a fall in Soybean oil prices and those of other commodities like cereals, domestically and internationally.