Soybeans: Positive Week in Chicago Supports Brazilian Market Despite Falling Dollar

Closing the week, soybeans in Chicago managed to sustain the highest price levels of the last two months.

Photo: Soybean crop and graph. Generated by Gemini

The week was marked by an interesting dynamic in the soybean market, with international and domestic factors exerting different forces on quotations. In Chicago, at the Mercantile Exchange (CBOT), oilseed futures recorded a positive week, driven mainly by expectations around trade relations between China and the United States. However, in Brazil, the fall of the dollar acted as a counterpoint, limiting the rise in prices in reais.

Despite a slight decrease observed in this Friday's session (25), soybeans in Chicago managed to sustain the highest price levels of the last two months. This positive performance reflects the market's sensitivity to speculation about a possible breakthrough in trade negotiations between the world's two largest economies, the United States and China. Any sign of détente in Sino-U.S. relations tends to boost demand for agricultural commodities, including soybeans, of which China is the main global buyer.

Source: TradingView. Soybean closing week sustain highest prices on CBOT

In the Brazilian scenario, the soybean market closely followed the movements of Chicago, but was also strongly influenced by the exchange rate. The devaluation of the dollar against the real throughout the week ended up mitigating the positive impact of the rise in international prices for Brazilian producers and traders. This demonstrates the intrinsic connection between the domestic market and the global scenario, where exchange rate variations can soften or intensify the effects of prices practiced in exchanges such as the Chicago one.

Despite this compensation generated by the exchange rate, the Brazilian soybean market remained relatively firm throughout the week. The deals continued to happen, reflecting the dynamics of domestic supply and demand, as well as expectations for the coming weeks, which include monitoring the progress of the 2024/25 harvest and the outlook for demand, both domestic and foreign.

In summary, the soybean week illustrated the complex interplay of factors that shape the commodity's prices. While optimism about international trade supported gains in Chicago, the reality of the domestic exchange rate acted as a balancing factor in the Brazilian market. For the coming weeks, the market will remain attentive to the developments of the Sino-American negotiations, the pace of the Brazilian harvest and exchange rate fluctuations, crucial elements to define the direction of soybean prices.

Source: Adapted from information from Notícias Agrícolas