The SB board reaches maximum since 2012
SB maintains its bullish trend and reaches its highest values since December 2012. For its part, maize neared its historical record of mid-2021, but the abundant ethanol stocks in the US exerted negative pressure.
The context of productive uncertainty in which Argentina and Brazil are immersed underpins the values of grains at the international level. Coarse grains showed upward trends in recent days, returning to historically high values and therefore boosting the commercial flow in the domestic market. Because of this there was an increase in the number of participants and open purchase positions during the week, with SB being the main protagonist.
In the Rosario market, the increases in SB stood out, following the bullish tone of the reference market in Chicago. According to the records of the Cereals Arbitration Chamber of the Rosario Stock Exchange, the highest value was reached on Tuesday at 405 USD/MT. It’s worth highlighting that this price is the maximum registered since mid-December 2012. In addition, at the beginning of the week we could see a considerable number next-crop cargos being offered.
Regarding maize, there was an increase in the number of buyers in the market at the beginning of the week, unlike what happened at the end of the previous week, while the amount of open positions by the export sector increased, with possibilities of delivery until August. Following the record of the Cereal Arbitration Chamber of Rosario, the highest value reached in the week was 238.8 USD/MT, a maximum for the last eight months.
Regarding 2021/22 crop positions, the best offer of the week for the March was 230 USD/MT, while for late maize, the highest values seen were 210 USD/MT and 200 USD/MT respectively for June and July.
These movements, as previously stated, were driven by falls in production estimates for Argentina and Brazil. More specifically, in recent days some of the main consulting firms and agricultural institutions in Brazil reduced their projections in considerable volumes. Agencies such as AgResource, StoneX, and AgRural placed Brazil’s production below 130 Mil MT (125 Mil MT, 126.5 Mil MT, and 128.5 Mil MT respectively), when other international agencies remained above 140 Mil MT.
Likewise, the possibility of variations within the main producers in Brazil is also contemplated. As estimated by AgRural, Goiás, which historically is the fourth producing State, could become the second-largest Brazilian supplier, only behind Mato Grosso, due to the historical yield that is currently estimated at 3.84 MT/Ha average, exceeding Brazilian average from the 2020/21 campaign (3.53 MT/Ha).
Meanwhile, although cuts were made in the production estimates for maize in Brazil and Argentina, in recent rounds the price of cereal in Chicago was influenced by the bulky stocks of ethanol in the United States. From this viewpoint, the importance of the US industry within the demand for cereal acquires sufficient magnitude to counteract the upward effects implied by the production falls in South America and pushed maize futures into negative territory.
The evolution of ethanol stocks shows a huge growth in the last 5 weeks. This was a consequence of the good level of maize processing and, therefore, of the industrial production of ethanol, while the demand for fuel in the US fell. This way, 5.2 million barrels were accumulated in just over a month, going from 20.7 million barrels on December 24, to 25.9 million barrels by January 28. In other words, the mentioned increase was 25% in just 5 weeks, going from the lowest volume in 5 campaigns to an all-time high for this time of year.
Despite these conditions, maize futures traded in Chicago are still in a range of high prices considering levels of recent years, although it is still below the highs of last year and the historical values of 2012. A similar situation occurs in the prices of SB where, although the oilseed contracts are closer to the maximum, there is also a considerable difference with the prices of 10 years ago.
Source: https://bcr.com.ar/
Photo: REUTERS/Stringer
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