Inor Ag. Assmann
Breaking
barriers
Projections foranormal cropandasmall increase
inareainBrazilareviewedwithenthusiasm
withintheperspectiveofpricesandforeignsales
Theexpectation for the2016/17 soybean
crop,nowbeingseeded,toreachtheconsid-
erable amount of 103 or 104 million tons in
Brazil, anticipates stablepricesuntil thenext
season, at home and abroad. Carlos Cogo,
director and analyst at Carlos Cogo Consul-
tancy, has it that the scenario ispointing toa
normal crop and the volume to be harvest-
ed will correspond to the initial expectation
of the past crop: not confirmed, due to the
loss of 8 million tons, approximately. “With
meteorologists signaling normal weath-
er conditions, at most a weakened La Niña
mayoccur,Ihavebeenprojectinganareain-
crease of only 1%”, Cogo admits.
In light of this, he hopes Brazil will cele-
brate record exports in 2017, from 55 to 57
million tons. This had been the expectation
for 2016, before the crop failure”, he adds.
According to Cogo, in the final stretch of the
year, with well-defined crops in the United
States, Brazil, Argentina and Paraguay, the
international market becomes predictable.
“The market has already defined the
soybean prices in accordance with the size
of the crops and expectations for demand.
In mid-September, there was fear that the
futuresmarket would operate betweenUS$
8 to US$ 8.50, but it was operating at US$
9.50 to US$9.70, and experienced peaks of
US$ 10”, comments Cogo. “With the expec-
tation for the Brazilian Exchange Rate to
keep the dollar at R$ 3.20 to R$ 3.30, for Bra-
zil, international prices are favorable, with
grossmargin of 50%to 55% in the South”.
In his view, prices in 2017 should re-
main on a par with the past two years,
in spite of the depreciation of the dollar.
Cogo spots no chances, except for a short
period, with the North-American harvest
coming to a close, prices could reach US$
9 per bushel. “As the market has pre-de-
fined the prices, we can see that they are
bound to become stable”, he summarizes.
Over thepast years, theanalyst observes
that whenever record crops are announced
in the United States, they are counterbal-
anced and annihilated by announcements
of record exports. “In the United States,
whenever prices fall belowUS$ 9.50, buyers
flood the market. This has created a price
ceiling, which couldgoupdependingon the
weather conditions until the crop in South
America is harvested”, he emphasizes.
In his view, only a fact that differs from
the normal pattern could alter the aver-
age prices throughout the next season,
like a great crop failure, with the finan-
cial crisis getting more and more serious
in the world, changes in interest rates and
in the Exchange Rate in the United States,
or something of the like. “Global demand,
although China has lost its growing im-
petus, will continue very strong, and this
will be the engine of the soybean com-
plex in 2017”, he emphasizes.
Market has already defined soybean
prices, anticipating amore stable horizon
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