Agricultural prices collapse in May – 05/31/2023 – Shuttle

Internal and external factors brought down the prices of agricultural products in May. Corn, one of the most affected, fell 19% last month, after closing at R$ 53.7 per bag in the region of Campinas (SP), according to Cepea (Center for Advanced Studies in Applied Economics) monitoring.

This slowdown begins in the countryside, where a sack of cereal dropped to R$34 in Sorriso (MT), a price not seen by producers for a long time. In Cascavel (PR), the bag was quoted at R$ 54, according to data from the AgRural consultancy. Average corn prices last month were the lowest since August 2020, according to Cepea.

For Alaíde Zimmer, an analyst at AgRural, internally there is the expectation and the potential of a large harvest, which interferes with the behavior of prices. Furthermore, this is a moment when funds are exiting investments in agricultural commodities on the foreign market, which also affects international prices.

Corn ends the month of May being traded at US$ 5.94 per bushel (25.4 kg) on ​​the Chicago Stock Exchange, a value close to the minimum quotation registered last week. Soybeans, when retreating to US$ 12.99 per bushel (27.2 kg), fell to the lowest price since December 2021 in Chicago.

In Brazil, a bag of soy fell to R$ 108 at the end of last month in Sorriso (MT), according to AgRural. The monthly average was R$ 131 in Paraná, the lowest value since August 2020, in Cepea’s calculations.

Zimmer says that, in addition to the good internal soybean and corn harvest, planting in the United States is progressing and, for now, there are no major reasons for concern with the production potential there, although there are some regions of the Midwest with droughts punctual.

Rice, coffee and wheat are also with price reductions. Wheat, after exploding values ​​following Russia’s invasion of Ukraine last year, returned to $5.94 a bushel (27.2 kg) in the United States on Wednesday. In Paraná, a ton of cereal ended the month with a price below R$ 1,000 per bag, which had not occurred since the beginning of the year.

The price drop in the agricultural sector also affects proteins. The average value of the arroba of beef in the state of São Paulo was the lowest since December 2020. At the end of May, it was at R$ 243, a drop of 10% in the accumulated result for the month. The kilogram of pork fell 7% in the month, and chicken, 3%, according to Cepea.

The drop in prices in the field reaches the wholesale and consumer. This Tuesday (30), the FGV pointed out an accumulated drop of 11% in the prices of wholesale agricultural products. Soybeans and corn are among the biggest bearish pressures.

The deceleration of prices in the international market is already affecting the US agribusiness trade balance. This Wednesday (31) the USDA (United States Department of Agriculture) reduced the expectation of foreign sales in the sector to US$ 181 billion in fiscal year 2023. In February, the agency expected exports of US$ 184.5 billion .

In Brazil, expectations of a good trade balance continue. International prices fall, but the country has a greater volume of products to export. Exports should not be too far from the US$ 159 billion of last year.

The United States, after a surplus of US$ 2.4 billion last year, will have a deficit of US$ 17 billion in the external balance of agribusiness this year. Corn, soy, wheat and beef and chicken are among the products that will yield less than expected.

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