Soybean Prices: The Impact of Record Harvest and Crash Forecasts

The agricultural industry faces significant challenges with the recent drop in soybean prices, one of the pillars of Brazilian agribusiness. The prospect of a record harvest in southern Brazil, combined with the expected increase in soybean production in the United States, is putting downward pressure on prices. This situation is highlighted by experts, such as Carlos Cogo, who predict a trajectory towards 11 dollars per bushel.

Market Perspective on Soybean Prices

With a North American crop projected to reach record levels, soybean stocks are strengthening. In other words, they contribute to the stabilization of soybean prices around the average of the last ten years. Global demand for soybeans remains solid despite concerns about a potential slowdown in demand from China.

Current Harvest Profitability

The profitability of the current harvest, harvested in 2023/24, faces significant challenges. Tight or even negative margins are a reality for many producers, especially when the production cost equals or exceeds the selling price of soybeans. The concept of “break even” becomes crucial, indicating the point at which soybean revenue equals the cost of production. On the other hand, many producers are struggling to achieve this financial balance, which puts the economic viability of their operations at risk.

Future Perspectives on Soybean Prices

Currently forecasts for La Nina are generating expectations of a possible improvement in soybean prices in Chicago. The arrival of this weather phenomenon during the North American harvest could increase the risk of crop failure, leading to a review of future soybean prices.

Costs for the Next Soybean Harvest

Although production costs are not expected to rise significantly next season, challenges remain for producers. The “break even” for the harvest 24/25 It varies by region, but remains a concern for many farmers. In particular, the South and Southeast regions face a delicate balance between costs and revenues, while the Cerrado, in Mato Grosso, maintains a higher “break even”.

Grain Crop Failure Forecasts

In addition to the challenges faced by the soybean industry, forecasts for the soybean harvest 2024 in Brazil they are dark. The National Supply Company (Conab) estimates a significant decline in grain production, especially soybeans and corn. Factors such as El Niño contribute to reduced productivity, with harvest forecasts 11 times lower than initially projected.

Impact on Brazilian Agribusiness

This reduction in grain production could have a significant impact on Brazilian agribusiness, affecting not only producers, but the entire supply and export chain. With soybeans and corn as the country's main agricultural products, a drop in the production of these crops could compromise the sector's economic stability.

Investment diversification is essential

Finally, faced with these challenges, it is essential that Brazilian agribusiness producers and stakeholders are prepared to face a volatile and unpredictable market environment. Therefore, risk management strategies, investment diversification and adaptation to climate conditions are fundamental to ensuring the resilience and sustainability of the agricultural sector.

With information @ Rural Channel It is West Magazine