The soybean market should follow the week with an eye on the United States Central Bank of States (FED) meeting, which will set the course for interest rates in the country shortly after the SVB crash, according to Ruan Sene, analyst at Grão Direto Market. The FED had already announced a slowdown in interest rate hikes.
“Additionally, the market will keep its attention on information on the progress of African swine fever in China. The virus is highly contagious and spreads quickly among pigs, causing death or needing to be slaughtered. The domestic pork market will see an increase, which will intensify the domestic demand for soy bran, as it is used to make animal feed. Used. Based on logistics conditions and the progress of the harvest, premiums are pulling down prices on the Brazilian physical market, sustaining the decline. The decrease in Chinese demand due to swine flu is putting downward pressure on the Chicago quotes for next week”, comments Grão Direto.
The past week has highlighted a resurgence of African swine fever in China, an increase in the percentage of biodiesel blended into diesel, and an increased chance of an El Niño in Asia. “This week, the contract expiring March/23 and the contract expiring May/23 closed at US$ 14.76 a bushel (-3.02%) for the week. The contract matures on Jul/23, at U$ 14.61 (-2.21%) per bushel”, he added.
“The African swine fever epidemic in China has already started to give the same feeling to the market in 2021, when the Asian country killed 40% of its pig herd. At that time, the disease contributed to a significant drop in Brazilian soy premiums, and now, in 2023, it may happen again, which is the current “Exacerbating the decline. The swine market is the world’s largest demand for soybean meal, which is used to feed the herd, and a new significant slaughter could significantly reduce demand for Brazilian soybeans,” he concludes.
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