Highlights
Eduardo Vannin, is a cash grain export trader in Brazil. His special report Saturday morning:
Brazil Soybean Market: The EC (weather) model shows good amounts of rain and a good coverage of rain going into the next week, but there is a lack of uniformity in the information.
Two factors harmed soybean prices:
1) the EC model has been maintaining forecasts of good volumes of rain for next week, volumes that vary from 40 to 80 mm in the 7-day run for MT (Mato Grosso), with good confidence – it is worth pointing out that at least 60% of MT´s crops are in the pod filling stage. This round of rain is critical to avoid downgrades in Mato Grosso´s crops.
The EC and GFS (American weather model) agree about good rains in Argentina and less rain in Southern Brazil, which would be beneficial for that area (45-46 Mil tons of soybeans).
2) Sea freight is killing. Freight rates rose more than $10 per ton in the US Gulf-China and $5 per ton in the Santos-China route. The difference between Santos and the Gulf to China jumped up to $20 per ton. This spread is normally around $6 to $9 per ton. This means just the freight, USG (US Gulf) soybeans are more expensive than Brazilian beans at 55 cents per bushel CFR China (Cost of product & FReight delivered), in addition to the difference in the FOB (Free on Board) premium.
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