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SANTOS Token Surges 115% Following Binance Futures ListingThe Santos FC Fan Token ( FPMARKETS:SANTOS ) experienced an explosive price surge of over 115% after being listed on Binance’s USD-Margined perpetual contracts, sparking renewed interest in the fan token market. This Binance listing has not only brought in massive trading volume but also generated heightened market optimism. The big question now is whether this uptrend will continue or if SANTOS will settle into a consolidation phase. Binance’s Strategic Listing Boosts Investor Confidence On October 28, Binance officially announced its listing of the SANTOS USD-Margined perpetual contract, allowing traders to leverage the token with up to 75x margin. This listing comes at a critical time, as fan tokens continue gaining traction within the crypto ecosystem, often moving in sync with sports events, fan engagement, and exclusive partnerships. By listing SANTOS with substantial leverage, Binance has positioned the token in front of a massive user base, signaling a strategic move to enhance liquidity and reach. The initial investor reaction has been overwhelmingly positive, with trading volume for SANTOS spiking by 1,552% to $220.72 million within 24 hours. Much of the recent momentum can be attributed to this elevated exposure on Binance, mirroring a similar trend observed when the Solana meme coin, Moo Deng, surged 170% following its futures contract launch. This strong trading activity aligns with the growing interest in fan tokens and the expanded trading options that Binance’s perpetual contracts provide. Technical Analysis From a technical perspective, the SANTOS token is currently experiencing strong upward momentum. The token’s RSI stands at 83, indicating that it has entered overbought territory. Typically, an RSI above 70 signals that an asset may be due for a pullback or consolidation; however, the high trading volume and strong bullish sentiment suggest that SANTOS may continue pushing higher. Additionally, the SANTOS token is trading above key moving averages, reinforcing the bullish trend. The recent breakout from its 24-hour low of $3.20 to a high of $7.99 highlights the token’s impressive volatility and investor enthusiasm. The listing has set a solid support level near $6.00, with the next potential resistance zone around $8.00 if the current buying pressure persists. What’s Next for SANTOS? While SANTOS’s future price movement will depend on sustained interest and trading volume, Binance’s influence and the potential adjustments in leverage and funding rates provide both opportunities and challenges for the token. Binance has stated that it may modify the futures contract’s settings based on market risk, which could impact SANTOS’s trading conditions and volatility. Overall, FPMARKETS:SANTOS is positioned favorably for continued growth, especially as Binance maintains its listing. For now, market conditions and trading volume indicate that the fan token could see further gains, but investors should watch for any adjustments from Binance that may influence SANTOS’s short-term price action.
Long
by DEXWireNews
PAGS high earnings yield, low book value, pressed on bollingers Going long a combination jan 2025 options spread and long stock. I am bullish the stock over the 5 year outlook at current prices. It could trade in a 6 to 14 range for a while before breaking out. 5 year out look price target could be 30-40 dollar stock at high multiple PE on stock. Company is a payments company in brazil. Earnings yield is very high, pe is very low. Forward 2025 PE is 6.60. Price is near Tangible book value, at 6.54. RISK-EWZ etf is showing possible risk to the downside, that could hurt PAGS. ------------------------------ following info credit to perplexity.ai -------------------------------- PagSeguro Digital Ltd. (NYSE: PAGS) is a Brazilian fintech company that provides financial and payment solutions. Here's an overview of PAGS stock and the company: ## Company Overview PagSeguro Digital offers a range of services including: - Digital banking solutions - Online and point-of-sale (POS) payment processing - Debit, credit, and prepaid cards - Credit products like loans and overdraft accounts - Insurance and investment services The company primarily serves consumers, individual entrepreneurs, micro-merchants, and small to medium-sized businesses in Brazil and internationally ## Analyst Outlook The stock currently has a "Buy" rating from analysts, with an average 12-month price target of $15.11, representing a potential 71.51% increase from the current price . ## Recent Developments PagSeguro has been showing strong growth in its core business: - In Q2 2024, the company reported a 34% increase in Total Payment Volume (TPV) and a 31.7% year-over-year growth in net income . - The company has been gaining market share and outpacing industry TPV growth, despite challenges from high interest rates in Brazil . While PagSeguro faces competitive challenges in the Brazilian fintech market, its discounted valuation and growth potential have attracted attention from some investors looking for long-term opportunities in the sector
NYSE:PAGSLong
by optionfarmers
Vale S.A. is riding the wave of optimism as the Brazilian stockVale S.A. is riding the wave of optimism as the Brazilian stock market rebounds, buoyed by China's economic stimulus and rising iron ore prices. Vale S.A. has emerged as a frontrunner in the recent upswing of the Brazilian stock market, with shares soaring over 4.5% thanks to an increase in iron ore prices driven by renewed demand from China. As the world's largest iron ore exporter, Vale stands to benefit significantly from China's stimulus measures aimed at revitalizing its economy. This positive momentum underscores Vale's vital role in Brazil's economy, reflecting broader trends in the commodities sector and showcasing investor confidence in the company's future performance amid ongoing global challenges. Rewards Price-To-Earnings ratio (5.3x) is below the BR market (9.9x) Trading at good value compared to peers and industry Analysts in good agreement that stock price will rise by 29% Risk Analysis Earnings are forecast to decline by an average of 4.8% per year for the next 3 years Dividend of 11.58% is not well covered by free cash flows
NYSE:VALELong
by Maximus20000
1
Macro Monday 57 - Venezuela Update ( 5 charts)Macro Monday 57 - Venezuela Update I'll have more charts for you over the coming week but feel this is an important event that could help shape South America's economic trajectory over the coming 5 - 10 years Last week I shared the country that has the largest oil reserves in the world, Venezuela. I noted that Venezuela stands at a critical juncture, with the potential for a historic return to democracy by way of national election on 28th July 2024. Unfortunately, the authoritarian socialist incumbent President Nicolás Maduro appears to have "claimed" victory in the election, amidst many observations of election fraud and interference. At present the people of Venezuela have taken to the streets in protest, are toppling Maduro's statues and demanding him to leave office. Only an hour ago reports of counter forces apparently breached a barricade to Maduro's home. Many world leaders have called out Maduro on what they see as a false election victory. The international pressure is mounting on Maduro's régime. The world recognizes the violation of the peoples choice. The election might look like its a major loss for the people of Venezuela, however it appears to have invoked an incredible revolutionary type response from the people, it has captured the worlds attention, and the attention of the likes of Elon Musk and Javier Milei (Argentinian President) both calling for Maduro's exit. In response Maduro has called out Elon Musk, whom he calls his "arch-enemy" since his post earlier today. Clearly threatened, pressure is mounting on Maduro internally and from the International community. The election results could be the tipping point for the Venezuelans , it appears that change is in the air in and a new dawn is approaching with the world backing the Venezuelans who have clearly had enough. Lets hope for as peaceful a transition as possible. If successful, the country with the largest oil reserve in the world, that was once twice as rich as China, 4th ranked world economy (1st in Latin America), can return to its former glory. If such an event were to unfold, Venezuela, IMO, could lead South America out of a developing economy to a booming one within the decade. Charts in South America Please see South America and all its compressing pennant formations and ascending triangles. Few cup and handles too at present Peru is a clear leader with Argentina, however it does not hold the worlds largest oil reserve like Venezuela which appears to be about to make major political change. Chile - AMEX:ECH Brazil - AMEX:EWZ iShares Latin America ETF - AMEX:ILF MSCI Peru NTR Index (USD) - ICEEUR:MPU1! Argentina - AMEX:ARGT PUKA
ILong
by PukaCharts
Macro Monday 46 - South America Indexes Signaling Major Trend Macro Monday 46 Emerging Chart Trend in South America and Brazil Brazil is the largest economy in South America, followed by Argentina, Chile, Colombia, and Peru. These 5 countries together hold a huge 90% share of the South American economy. Today we will look at index charts for South America and Brazil to get an overall initial technical picture from a price standpoint of the aggregate in these regions. IShares Latin America 40 ETF - AMEX:ILF The iShares Latin America 40 ETF (ILF) is a collection of the 40 largest Latin American equities by market cap. The index is heavily weighted in Financial Services which makes up 33% of the Index. Basic materials form 19% and Energy makes up 15% of the Index allocation. Interestingly NUBank NYSE:NUS has a large c.6% holding within the index. This is a stock I hold that has performed incredibly well and I have shared many bullish charts on NU. Incredible that a relatively New Bank has grown large enough to make it into the top 5 holdings here. The Top 5 companies in the ILF Index are: 1. Vale S.A. NYSE:VALE : 9.3% Allocation. This company is a global leader in iron ore production and the second-largest nickel producer (Basic Materials). 2. Petróleo Brasileiro S.A. - Petrobras NYSE:PBR : 7.6% Allocation. Known as Petrobras, this is a multinational corporation in the petroleum industry (Energy). 3. Itaú Unibanco Holding S.A. $ITUB. 6.5% Allocation. Itaú Unibanco is one of the largest banks in Brazil, providing a range of financial products and services (Financial Services). 4. Nu Holdings Ltd. NYSE:NU : 5.84% Allocation. Nu Holdings is a financial technology company that offers banking services and is known for its digital banking platform, Nubank (Financial Services). 5. Grupo Financiero Banorte, S.A.B. de C.V. SKILLING:GFNORTEO.MX : 5.36% Allocation. Banorte is one of the largest and most prominent financial institutions in Mexico (Financial Services) The Latin America 40 ILF Char SUBJECT CHART ABOVE What jumps from this chart? ▫️ Firstly we appear to forming a long term pennant style flag from which a break up is more likely than a break down. ▫️ We have been rejected from the upper diagonal line repeatedly and if we break above this line it would be a very good indication of an initial trend change. ▫️ We have dashed underside diagonal support line warns of lower prices if broken (historically has been useful). ▫️ We are above the 200 week SMA at present and we are challenging the PointOfControl (POC) Line. Summary South America 40 Index As this is a long term pennant style flag from a major increase in price action in the early 2000’s, a break above the long term diagonal resistance line would be a major signal of the beginning of a new bullish trend, keep in mind that such a price move would also demonstrate a break above POC (strong trading range to hold as support). We need to watch the diagonal underside support line (dashed line) for a break lower which would be an indication of significant weakness. Either direction will give us a good signal of how the largest companies in Latin America are performing and by extension South America. Now lets look at the largest performing country in South America, Brazil. Brazil Brazil is the 8th largest economy in the world and the only country in South America to make it into the top 10 world’s economies. Brazil is the top contributor to South American nominal GDP accounting for 61% of the increase in the South American economy (Int. $264 bn). In 2nd and 3rd place are Colombia (Int. $50 bn) and Peru (Int. $25 bn) with much lower contributions. Brazil’s Gross Domestic Product (GDP) for the year 2023 grew 2.9% and is expected to grow by c. 2% in 2024, lower is anticipated mainly as a result of the delayed effects of monetary tightening. Brazil is considered a key financial center for South America. It has the largest economy in the region and is home to a number of significant financial institutions and stock exchanges. São Paulo, in particular, is recognized as the financial capital of Brazil and is a primary hub for international business activity in the country. Brazil is also a leading producer of a host of minerals, including iron ore, tin, bauxite (the ore of aluminum), manganese, gold, quartz, and diamonds and other gems, and it exports vast quantities of steel, automobiles, electronics, and consumer goods. iShares MSCI Brazil ETF - AMEX:EWZ The iShares Brazil ETF (EWZ) seeks to track the investment results of an index composed of Brazilian equities. The ETF tracks a free float-adjusted market capitalization-weighted index designed to measure the performance of the large- and mid-capitalization segments of the equity market in Brazil. All this means is that Larger companies have a bigger impact on the index’s performance. The index is heavily weighted in Financial Services which makes up 25% of the Index. Energy at 22% and Basic materials at 16.6% of the Index allocation are 2nd and 3rd after Financial Services. The Top 5 companies in the ILF Index are: 1. Vale S.A. NYSE:VALE 3.SA : 11.3% Allocation. This is a mining company and one of the largest producers of iron ore and nickel in the world (Basic Materials) 2. Petróleo Brasileiro S.A. - Petrobras $PETR4.SA & $PETR3.SA: 10.1% Allocation. Commonly known as Petrobras, this state-controlled company is involved in the energy sector, primarily focusing on the exploration, production, and distribution of oil and gas (Energy). 3. Itaú Unibanco Holding S.A. $ITUB4.SA: 8.3% Allocation. Itaú Unibanco is one of the largest financial conglomerates in the Southern Hemisphere (Financial Services) 4. Banco Bradesco S.A. $BBDC4.SA: 8.0% Allocation. This is another major player in the Brazilian financial market, offering a wide range of banking and financial services (Financial Services) 5. WEG S.A. $WEGE3.SA: 3.5% Allocation. WEG is an industrial company that operates globally in the electric engineering, power, and automation technology areas (Industrials). The EWZ Chart What jumps from this chart? ▫️ Firstly we appear to forming a long term pennant from which a break up is more likely than a break down IMO. ▫️ We have been rejected from the upper diagonal line repeatedly and if we break above this line it would be a very good indication of an initial trend change. ▫️ We have dashed underside diagonal support line warns of lower prices if broken (historically has been useful). ▫️ We have yet to break above the 200 week SMA and we are challenging the PointOfControl (POC) Line. Summary Brazil Index A break above the long term diagonal resistance line would be a major signal of the beginning of a new bullish trend, keep in mind that such a price move would also demonstrate a break above POC (strong trading range to hold as support). We need to watch the diagonal underside support line (dashed line) for a break lower which would be an indication of significant weakness. Either direction will give us a good signal of how the largest companies in Brazil are performing and by extension South America (as Brazil is thee major contributor to South America. Overall Overall IF the Latin America ETF and the Brazil ETF break out of their respective pennants to higher levels and find support prior diagonal resistance lines, the 200 weekly SMA, and the POC, this could indicate a bullish trend in South America for years to come. It would then be worthwhile to then look at companies within Brazil and South America for trading and investing opportunities. All these charts are available on my Tradingview Page and you can go to them at any stage over the next few years press play and you'll get the chart updated with the easy visual guide to see how the South America market has performed. I hope its helpful. PUKA
AMEX:ILFLong
by PukaCharts
Does this seem like Goodbye to third world countries!The Brazilian fiscal issue is not going well. Therefore, it directly reflects on the IBOV index, especially for companies linked to the domestic economy, which is very dependent on family income and low interest rates (SELIC) to keep their activities up to date. This was already written in the stars. Sometimes we need to be seers. Lol The growing number of RJ (Judicial Reorganization) is a worrying factor at this time, and opens up gaps for it to contaminate the entire (domestic) consumer sector, from durable to non-durable goods. The big problem for now would not be the slowdown in the economy, as it is to be expected that soon after a big "boom" of easy money, things will start to get strange and to maintain this "growth" more money needs to be injected. That's where the danger lies. How can we keep the economy running if we have a lack of money in the Brazilian market? The only way out for the government would be via interest rates (SELIC), reducing it, to "artificially" heat up the economy and also put a definitive damper on supposed growth. Looking at it in a simplistic way, it is not the high interest rates in Brazil that are strangling the economy, but rather the lack of credibility and especially of decent, long-term projects that involve foreign money. Therefore, reducing interest rates (SELIC) for now will not solve anything for Brazil, it will only advance the process of "euthanasia" of the strong, but weakened, Brazilian economy. As is to be expected, "Brazil does not miss the opportunity to miss great opportunities." Another factor that is in evidence is that we see foreigners rescuing their rich money from emerging markets, this is a bad sign, after all, something big could be coming later on a global level, impacting all countries across the globe. We are still working within the corrective bias described in the previous analysis, so the most interesting support point for the moment is the 124K range (psychological support), but rational support is found at 121.8K. Below, I leave an image of the bearish pivot on the monthly chart pointed out by the SETUP used. He mentions that the loss of the 126.6K range sets precedents for sharper corrections, as there are almost 50 days working in this price range. Note. The red lines are support points. The loss of it sets precedents for prices to seek the white line and, consequently, the yellow lines. This is important? We never learn! Do your analysis and good business. Be aware. If you buy, use Stop Loss. See other graphical analyzes below.
BMFBOVESPA:IBOV
by MacD_Bollinger
Divergence Unveiled: Ibovespa & S&P500“Emerging markets conclude 2023 on better note than developed markets” – S&P Global Market Intelligence. How much of this has been reflected in the respective market indices? Figure 1: Ibovespa and E-mini S&P500 Index Futures Figure 1 presents a retrospective view of the Ibovespa Index Futures (IND1!) and E-mini S&P500 Index Futures (ES1!) since the onset of the pandemic. While the indices initially traded in tandem, a noticeable deviation emerged since the middle of 2021. The IND Futures to ES Futures ratio testing long-term resistance at 25 raises questions about a potential rebound or breakout to the downside. Let's delve into the methodologies of these two index futures to gain insights into their recent divergence. Index Methodology and Weightings Figure 2: Top 10 Constituents of Both Indices Examining the top 10 constituents of both indices in Figure 2, we observe fundamental differences. Despite their similarities as float-weighted benchmarks for large-cap stocks in their respective countries, the Ibovespa Index comprises 86 stocks compared to the SP500's 500. This fundamental distinction results in a significantly larger total weight for the top 10 constituents of the Ibovespa Index, suggesting that IND future prices are more susceptible to the performance of its leading components. Ibovespa Driven by Global Commodity Prices Figure 3: Ibovespa vs Brent Crude Oil, Nickel, and Iron Ore Dominated by the Energy, Financials and Basic Materials sector, the combined weight of VALE SA and PETROBRAS holds significant influence. While VALE SA is the largest producer of iron ore and nickel in the world, PETROBRAS is heavily involved in the petroleum industry. Their earnings are likely to increase following an increase in the traded prices of iron ore, nickel, and crude oil, respectively. Positive correlations with Nickel, Iron Ore, and Crude Oil Futures prices indicate periods marked in grey boxes since the pandemic, where fluctuations in commodity futures potentially explain observed patterns in IND prices. Figure 4: Global Commodity Index Hence, given IND1!'s demonstrated sensitivity to commodities, understanding the general trajectory of commodities becomes paramount. The S&P Goldman Sachs Commodity Index (GSCI) provides an overview for commodities. In Figure 4, the GSCI acts as a good proxy for the commodities cycle and direction, here we observe a 30% correction from the peak, erasing some of the gains derived from the post-pandemic recovery and the Russia-Ukraine war. However, since the beginning of 2024 we see signs of a potential trend higher with the index starting to creep higher. Figure 5: Bullish Trends Observed on Multiple Commodities Is this just part of the usual price volatility for commodities or is the move higher significant? A detailed scrutiny of recent price movements in Figure 5 reveals a bullish outlook for all three previously examined commodities, relevant especially to the Ibovespa Index. The breakout from an ascending triangle in Brent Crude Oil Futures, the price rebound from historical support in Nickel Futures, and the testing of the upside trendline in Iron Ore Futures collectively indicate a prevailing bullish bias, perhaps suggesting more to the broader move higher for commodities. Are Lower Rates Better? Figure 6: Changes in Rates and USDBRL on Ibovespa The Financial Sector, with significant weight in the index, is examined. While higher interest rates expand profit margins of financial institutions, extended periods of tight monetary policy can expose vulnerabilities and increase loan losses. Since August 2023, Brazil’s Central Bank Monetary Policy Committee, Copom, has had five consecutive rate cutes up to a cumulative total of 250 basis points while the market continues to alter bets on the Fed’s first rate cut. Intriguingly, while interest rate parity would suggest a strengthening USDBRL, the observed weakening suggests a unique deviation. Furthermore, as the Fed gains more confidence, evidenced by each data print, the likelihood of impending rate cuts becomes more apparent. Conversely, the outlook for further cuts by Copom is less clear due to persistently high inflation. Interpreting these factors collectively points towards a weaker USDBRL and a correspondingly stronger IND1!; as suggested by the historical inverse relationship between Ibovespa and USDBRL observed in Figure 6. Additional Support for Ibovespa Figure 7: Brazil’s Growing Net Exports The rolling average of the net exports, although exhibiting some degrees of seasonality, seems to be a leading indicator of the IND prices. The reversal and positive trend in the rolling average of net exports since 2015 aligns with the climbing IND prices, indicating substantial support from Brazil's trade balance. EM Still an Attractive Option Figure 8: Comparing Both Index Futures’ RSI Figure 8 brings to light yet another noteworthy point, using the ES1! as a proxy for the Developed Markets (DM) and the IND1! as a proxy for Emerging Markets (EM), we see the DM significantly overbought relatively to the EM. Hence, we argue that there is further room for the EM Index to grow. Putting into Practice Figure 9: Setting up the Trade Looking at a shorter timeline, Figure 9 unfolds a compelling narrative marked by a recent decisive breakout from an inverse head and shoulders pattern. This breakout, coupled with the notable reversal in commodity prices, Brazil’s improving balance of trade, a weaker USDBRL, and the RSI not yet overbought; we lean bullish on the IND1!. To express this view, we can long the Ibovespa Index April 2024 Futures (INDJ4) at the current price level of 129,070. • We can set the take profit by adding the difference between the neckline and the bottom of the head (24,695), to the neckline (121,980). This puts our take profit at 146,675 and a hypothetical gain of: 146,675 – 129,070 = 17,605 points. • Likewise, we can set the stop loss at the neckline (121,980), which brings us a hypothetical maximum loss of: 129,070 – 121,980 = 7,090 points. • Each point is equivalent to 1 BRL. Overall In summary, understanding the intricate dynamics between global commodity prices, monetary policies, and trade balances provides valuable insights for anticipating the trajectory of the Ibovespa Index Futures in the evolving financial landscape.
BMFBOVESPA:IND1!Long
by inspirante
1
Top 7 inflation-induced trading opportunities this weekThis week, the focus of many traders will be on US inflation data, which will provide valuable insights into the Federal Reserve's monetary policy outlook. The forecasts indicate a potential 0.2% increase in both headline inflation for December and the core rate. On an annual basis, the headline inflation rate is anticipated to rebound to 3.2% from November's five-month low of 3.1%. Meanwhile, the core rate is likely to ease to 3.9%, the lowest since May 2021. This crucial data will be released on Thursday. In the midst of the US inflation focus, there are noteworthy inflation data releases from other countries, including Switzerland, Australia, Mexico, Brazil, China, India, and Russia. This diverse set of data presents many potential trading opportunities for USD pairs throughout the week: Monday: Switzerland Inflation Rate Tuesday: Australia Monthly CPI Indicator Tuesday: Mexico Inflation Rate Thursday: Brazil Inflation Rate (before US inflation data) Thursday: China Inflation Rate (after US inflation data) Friday: India Inflation Rate Friday: Russia Inflation Rate
by BlackBull_Markets
NUBank Update - Stop Raised NUBank - NYSE:NU ⚠️We already lost the 21 SMA ✅Raised my stop to $7.55 Good news is we have POC under price and we had two touch downs to the $7.70 level. IMO if we lose these both, the diagonal line too will be lost too & id rather get some of the position off the table. I still think we can bounce and go higher with a wave 5 extension higher. You could enter a trade here and set a stop under POC to your risk tolerance. Would I do this? Only with a small position because we have had one hell of a run. An ideal entry would be off the 200 MA @$6.83 at present. Lets see how this plays out. Incredible run and profit, and now a protective stop in place hat ensures gains will crystalize if structure is broken PUKA
NYSE:NU
by PukaCharts
NUBANK - A perfect example of great TANUBANK - NYSE:NU A beautiful case of Technical Analysis providing all the structures for a winning trade. First shared this idea earlier in the year. It was just an idea....now we are almost 100% up. Surpassed 90% return on this trade since taking up positions in June 2022 and again in Jan 2023. I sold a portion in Aug 2023 with a breach of the 21 day SMA and reentered slightly lower with a stop. We then reclaimed the 21 day and started moving towards the target. What's beautiful about this trade is the following: 1. We had a double bottom 2. We then had a parallel channel breakout with a target that aligned with the 1.618 fib extension. 3. As things progressed we identified a 5 wave Elliot count. Now we have clear incoming targets at $9.04 and $10.17. We will use the RSI oversold timeframes from the past to help identify when we need to watch the chart carefully (red area) and we also know we can rely on the 21 day SMA as a trigger sell. All the hard work is done here on this trade. We just need to ensure we sell some of our position or all of it if it breaks down. Typically after a 5 wave count you get an ABC style correction. With the TA being perfect on this chart to date, it would not surprise me to see a good correction when this wave 5 completes. All the same, we remain in a winning trade and stay on trend until the trend changes. I almost forgot to mention earnings are released next Tuesday 14th November , so we will need to keep an eye then too. NYSE:NU PUKA
NYSE:NULong
by PukaCharts
Solid Brazilian Rains Dampen Soybean PricesSoybean prices have been on a rollercoaster fuelled by turbulence over the last month amid elevated weather concerns, changing production yields, and geopolitical upheavals affecting prices. Winters are vital for bean traders. This paper delves into the various forces at play to guide traders and portfolio managers to navigate through the rough weather. Favourable weather combined tail winds for Soybean harvests plus weakness in destination markets are setting the ground for bearishness in bean prices. A short position in CME Soybean futures can be used to manage risk. US SOYBEAN HARVEST RESULTS Soybean harvest in the US has concluded providing a more certain supply outlook for the ongoing marketing year. Next Soybean harvest will take place in March-June in South America. Until then, current inventories will have to meet the demand. As per USDA update , Soy harvesting in the US is 90% complete. Yields for the 2023/2024 marketing year were updated to 49.9 bushels/acre in the November WASDE report compared to 49.6 bushels/acre in the October report. This resulted in an upward revision to the production and ending stocks figures as well since the consumption forecast remained unchanged. A similar update was reported by USDA in the global soybean outlook which suggested that global soybean production would be marginally higher. Despite the upward revisions, the US production figures represent a YoY decline of 4 million MT (-3.3%). The upward revision then, provides a larger buffer to account for potentially higher consumption. This is vital because bean inventory balances in the US this year are tighter than the previous two years. US Ending stocks are forecast to be 6.68 million MT compared to 7.3 million MT last year. As a result, although the upward revision expanded the buffer, it is quite narrow which could exacerbate a shortage in case consumption edges higher. SEASONAL TRENDS As highlighted by Mint in a previous paper , seasonal trends in Soybean futures are affected by harvest. During harvest, prices decline before recovering post-harvest as inventories are depleted. However, the seasonal trend is distinct during El Niño years where returns underperform the usual average, especially in December-January. BRAZIL WEATHER CONCERNS LIFTED Soybean markets are heavily influenced by weather in Brazil. Hotter than expected weather and erratic precipitation raised concerns for Brazilian crops which drove Soybean prices higher over the past month. Brazil experienced a strong heat wave last month which has a negative effect on crops. Weather effects on crop yields are most pronounced during the early stages of growth. However, weather is now set to improve as weather forecasts suggest the arrival of rains and milder temperatures ahead. Both are positive for the bean crop. Still, higher-than-expected precipitation remains a concern for the crop. As highlighted by University of Delaware , too much rainfall during the planting stage can lead to significant yield reduction. Source: USDA Brazil is the largest producer of Soybean and its harvest had been expanding rapidly over the past three years. This had previously led to oversupply concerns in global markets, exacerbated by a low demand environment in the largest soybean consumer China. Though consumption in China is forecast to increase YoY, it will not be enough to match the increase in global production (especially in Brazil) per the latest WASDE estimates . Net effect is larger ending stocks globally which is bearish for Soybean prices. EL NIÑO UPDATE In this El Niño year, unexpected weather pose significant concerns as it deviates from the anticipated impact on soybean crops outlined in our previous paper . While El Niño typically brings favourable conditions, such as increased rainfall and mild weather leading to a 3.5% higher soybean yield on average. Brazil is experiencing unexpectedly warm weather and low precipitation, diverging from the usual patterns. The unpredictability of these conditions amplifies their potential impact on prices compared to previously expected El Niño effects. Source - NOAA El Niño continues to evolve adversely as Oceanic Niño Index (ONI) has reached its highest level since 2016. Sea Surface Temperatures (SST) at Niño 3.4 is another indicator that has reached an all-time-high. Source - NOAA SIGNAL FROM SOYBEAN FUTURES MARKET Technical signals suggest a bearish trend in bean futures. Front month bean contract was on an upward trend since mid-October. The front month contract tested but failed to pass a key pivot resistance level of 1,381 USc/bushel. Price has since declined 5% and points to a reversal as the Moving Averages close to forming a bearish crossover. Asset managers switched from net short to net long positioning over the past month. However, over the last 2 weeks, asset managers have reduced net long positioning by 20k contracts. Options markets point to bearishness as participants are positioned for Soybean price to decline with a P/C ratio of 1.31 which suggests more bearish bets than bullish ones. Further, bearish bets have increased sharply over the past week with the largest increase in puts on the April monthly contract and December monthly contract. Moreover, participants have reduced call OI on the front-month December contract. HYPOTHETICAL TRADE SETUP With the overhang of negative weather in Brazil lifted, bean prices are likely to decline and pare gains from the past month due to a weak demand environment. Market metrics also suggest a bearish trend. To gain exposure, investors can deploy a short position on Soybean futures expiring in Feb ( ZSH2024 ). CME Soybean futures expiring in March require a maintenance margin of USD 2,800 (as of December 4th) and provide exposure to 5000 bushels. Entry: USc 1,336 Target: USc 1,272.25 Stop Loss: USc 1,381 Profit at Target: USD 3,187 Loss at Stop: USD 2,250 Reward/Risk: 1.42x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CBOT:ZS1!Short
by mintdotfinance
1
Have you had your coffee yet?We already know that coffee beans have always been one of the most traded commodities in the world, specifically second, so why the sudden interest again? Figure 1: Summary of World Coffee In recent years, global consumption has increased at a higher rate than production due to pent-up demand. This rather large deficit in balance in the past two years puts the coffee market in an interesting spotlight. Nonetheless, arabica beans continue to be the more favored selection, with South America as the central production region, driven mainly by Brazil. Gaining Access to This Market Amongst various coffee derivatives, a coffee futures contract is the most common way to trade coffee. The 4/5 Arabica Coffee Futures (ICF) listed by Brasil, Bolsa, Balcão (B3) Exchange is an example of such contracts. For those unfamiliar with futures contracts, it is a legal agreement to buy or sell a specified asset at a predetermined price for delivery at a specified time in the future. For the ICF contract, the asset is 100 bags of 60 kilograms filled with grade 4-25 or better Arabica coffee bean produced in Brazil that is meant to be delivered in the city of São Paulo, Brazil, or a B3 accredited warehouse. The ICO’s Grading and Classification of Green Coffee states that “coffees of the highest altitudes are denser and larger in size than those produced at lower altitudes.” Loosely speaking, larger beans with higher density are better. The grade indicators refer to the number of defects found in a 300g sample. To achieve a 4-25 grade, the coffee must be classified by B3 in accordance with its rules and regulations. This grading system is more specific to Brazil-produced beans. Other coffee-producing countries have other specifications and classifications. The Trampoline Effect Figure 2: Supply & Demand Factors Historically, the ICF future prices resemble that of a trampoline, with major support lines at the 124.55 and 103.60 levels. Let us explore some of the factors that caused these jumps previously; bear in mind that consumption of Arabica beans has been steadily increasing since the 1990s. S1: Poor weather conditions in South America in 2010 Brazil suffered from poor weather conditions and faced significant problems in meeting the expected crop yield. Large producers were also considering hoarding their stocks. The problem was further exacerbated by the backdrop of record low arabica stock levels since the 1960s. S2: Drought in Brazil in 2014 Similarly, poor weather conditions caused uncertainty in crop production for the harvest year and pushed prices up. S3: Drought and frost in Brazil 2021 The effects of drought followed by a severe wave of frost in Brazil wiped out its coffee production. This was accompanied by increased freight costs and shipment issues caused by Covid-19. S4: Harvest Conditions Evidently, weather conditions pose significant downside risks to the coffee supply. Moreover, occasional coffee leaf rust coupled with increasing demand has caused spikes in coffee prices. USD and Coffee Figure 3: ICF and DXY (Inverted) As with many commodities, coffee tends to move inversely with USD. This is especially so since most coffee contracts, like the ICF, are priced in USD. When the dollar rises, coffee becomes more expensive in non-USD terms and can cause international demand to fall, and vice versa. Figure 4: ICF and BRLUSD This relationship becomes more apparent when compared to BRLUSD. Our thought process: Local Brazilian producers and manufacturers traded these ICF contracts as a hedging tool. During the physical delivery of the beans, these market participants would then have to do a currency exchange. Consequently, the impact of BRLUSD rates would have a larger impact on them. Similar Coffee Futures Contract Figure 5: ICF and KC The two contacts’ underlying assets - arabica beans - have similar grading standards. Consequently, macroeconomic factors are likely to have similar impacts on the two contract prices. The prices between the two contracts exhibit a very strong positive correlation. We can then create a spread with ICF – Coffee C (KC) Futures Contract. Figure 6: ICF - KC ICF is quoted USD per bag for a contract size of 100 60kg bags, while KC is quoted USD cents per pound for a contract size of 37,500 lbs. We can then create a spread with ICF1!/60-KC1!/0.4536/100, by converting both contracts to the same base units. The spread setup indicates that KC generally trades at a premium compared to ICF. This could be attributed to several factors, a notable one being the higher liquidity preference investors tend to have for the KC contract, which might reflect a broader international preference. It is also worth noting that ICF requires Brazil-produced arabica beans, while KC comprises beans from other countries. This could explain the uncanny coincidence between the upside bias in spread movements (Figure 6) occurring in periods identified in Figure 2 – supply-side factors driven mainly from the Brazil side. Putting into Practice Enough has been said about coffee; you must be wondering how we then use this information to set up trades. Here are some ways for consideration. Case Study 1: Directional Driven By considering current macroeconomic factors on coffee, to express a “quieter” outlook on coffee, an investor could sell the ICF future contract (ICFH4). At the present level of 206.00, with a stop-loss above 219.00 – a conservative resistant line – it brings us a hypothetical maximum loss of 219.00-206.00 = 13.00 points. As shown in Figure 2, if ICF1! Reverts to major support line 124.55, a hypothetical gain of 206.00-124.55=81.45 points. Each ICF futures contract represents 100 bags; the value of each point move is USD100. However, as we approach the main harvest period for Brazil, May to Sep, it is of paramount importance for the investor to keep a watch for any potential hiccups that could negatively affect the harvest yield. Furthermore, this is likely to be a medium-term macro-driven strategy. Case Study 2: Spread Driven Regarding the ICF-KC spread currently trading at the upper bound, an investor with a bearish short-term view that the spread will trend downwards could sell ICF futures contract (ICFH4) and buy KC futures contracts (KCH4). At the present level of 206.00 and 169.95 for ICFH4 and KCH4, respectively. Following the formula above, the spread will be at –0.31336 points. Setting the resistance at the Fibonacci 50% ratio, we have a stop loss at -0.25, which brings us a hypothetical maximum loss of -0.25-(-0.31336) = 0.06336 points. Setting the support at the Fibonacci 38.2% ratio, we set our take profit at -0.40, which brings us a hypothetical gain of -0.31336-(-0.40) = 0.08664 points. The value of each point move in ICFH4 is USD100, while KCH4 is USD375. Conclusion There are various methods to create opportunities for investors, depending on how the investor would like to view the market or what other financial assets to pair up with coffee futures contracts. What we have covered in this article merely scrapes the tip of the iceberg, and we hope investors keep a creative mindset and explore other potential options. Disclaimer: The contents of this article are intended for information purposes only and do not constitute investment recommendations or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description.
Editors' picks
BMFBOVESPA:ICF1!Short
by inspirante
10
U.S DOLLAR vs BRAZILIAN REALHowdy fellas, I am Brazilian by origin so this matters to me. It's a chart that I always check, as I every now and then exchange these currencies (as well as the euro related to Brazilian real). Now we all know at some point the dollar index needs to take a step back and retrace. It could continue to push higher against other world currencies, but that wouldn't be very good. So unless we're headed for a new world depression, I believe the Gods will allow it do drop. With that being said, a very decent retrace is the 30% mark that brings it down to the $4 bucks. But if it repeats the 60% retrace as it did back in 2008 we're looking a much lower numbers. Take a look at the chart my friends and let me know what you think. Trade thirsty!
by mr_willmedina
Long Brazil Energy CIGCompanhia Energetica de Minas Gerais CEMIG is a Brazil-based holding company engaged in the energy sector. The Company, through its interests in subsidiaries or jointly controlled entities, is engaged in the generation, transmission and distribution of electricity. The Generation division consists of the operation of hydroelectric plants, wind farms and photovoltaic plant. The electric power transmission business consists of transporting power from the facilities where it is generated to points of consumption, distribution networks and Free Consumers. Its distribution operation consists of transfers of electricity from distribution substations to final consumers. In addition, the Firm is also engaged in the natural gas distribution throughout the territory of the state of Minas Gerais.
NYSE:CIGLong
by noam_chom
USD BRL chart Analysis EN and PT language On a weekly time frame, the Brazilian Real has experienced a downward trend since 2011. There are several reasons that have contributed to the market's inflation and the weakening of the Brazilian economy against the US Dollar. These reasons include factors such as job vacancies, high crime rates, corruption, and a complex tax system. The chart analysis indicates that the waves from 2011 to 2023 can be identified as five distinct waves, with wave 5 ending at 6 Brazilian Reals for 1 US Dollar. This signifies the continuous decline of the Brazilian economy over the years relative to the United States Dollars . In 2020, the Brazilian Real reached its highest exchange rate of 6 Reals for 1 Dollar, primarily due to the impact of the COVID-19 pandemic. From a technical analysis perspective, this peak could be considered the end of wave 5, which had started in 2011 and lasted until 2020. Following the peak of wave 5, a correction phase began, resulting in complex wave corrections known as WXYXZ waves. In my opinion, this correction was influenced by various economic problems in the United States, including the closure of many banks and a substantial increase in national debt, which exceeded 1.4 trillion dollars for the first time in 30 years. Additionally, the Ukrainian War also had an impact on the value of the US Dollar. These factors are likely to have a positive effect on the Brazilian economy since Brazil stands in a different position from the United States in terms of economic conditions. Moreover, Brazil implemented several changes at the beginning of 2023, such as the decision made by BRICS members to use their local currencies for official transactions, reducing dependence on the US Dollar. Considering the current exchange rate of around 5 Reals for 1 Dollar, it is possible that the price may experience a slight increase as part of the (x) wave. However, by the end of the year, it is expected to start moving downwards, reaching a range between 4.5 and 4.2 Reals for 1 Dollar. This downward movement would mark the completion of the Z wave, concluding the overall wave cycle. It is important to note that further developments and news will shape the future chart for the Brazilian Real. Economic and geopolitical events can have significant impacts on currency exchange rates, and these factors should be carefully monitored to assess the potential direction of the Brazilian Real against the US Dollar. BY Rami Rachid HiddenTreausre portuguese : Em um período semanal, o Real Brasileiro tem experimentado uma tendência de queda desde 2011. Existem várias razões que têm contribuído para a inflação do mercado e o enfraquecimento da economia brasileira em relação ao Dólar Americano. Essas razões incluem fatores como vagas de emprego, altas taxas de criminalidade, corrupção e um sistema tributário complexo. A análise do gráfico indica que as ondas de 2011 a 2023 podem ser identificadas como cinco ondas distintas, com a onda 5 terminando em 6 Reais Brasileiros por 1 Dólar Americano. Isso significa o declínio contínuo da economia brasileira ao longo dos anos em relação ao Dólar dos Estados Unidos. Em 2020, o Real Brasileiro atingiu sua maior taxa de câmbio de 6 Reais por 1 Dólar, principalmente devido ao impacto da pandemia de COVID-19. Do ponto de vista da análise técnica, esse pico poderia ser considerado o fim da onda 5, que havia começado em 2011 e durado até 2020. Após o pico da onda 5, uma fase de correção começou, resultando em correções complexas conhecidas como ondas WXYXZ. Na minha opinião, essa correção foi influenciada por diversos problemas econômicos nos Estados Unidos, incluindo o fechamento de muitos bancos e um aumento substancial na dívida nacional, que ultrapassou 1,4 trilhão de dólares pela primeira vez em 30 anos. Além disso, a Guerra da Ucrânia também teve impacto no valor do Dólar Americano. Esses fatores provavelmente terão um efeito positivo na economia brasileira, uma vez que o Brasil ocupa uma posição diferente dos Estados Unidos em termos de condições econômicas. Além disso, o Brasil implementou várias mudanças no início de 2023, como a decisão dos membros do BRICS de utilizar suas moedas locais para transações oficiais, reduzindo a dependência do Dólar Americano. Considerando a taxa de câmbio atual de cerca de 5 Reais por 1 Dólar, é possível que o preço possa ter um leve aumento como parte da onda (x). No entanto, até o final do ano, espera-se que comece a se mover para baixo, alcançando uma faixa entre 4,5 e 4,2 Reais por 1 Dólar. Esse movimento descendente marcaria a conclusão da onda Z, encerrando o ciclo geral de ondas. É importante observar que desenvolvimentos e notícias futuras moldarão o gráfico futuro para o Real Brasileiro. Eventos econômicos e geopolíticos podem ter impactos significativos nas taxas de câmbio, e esses fatores devem ser monitorados cuidadosamente para avaliar a direção potencial do Real Brasileiro em relação ao Dólar Americano. POR Rami Rachid HiddenTreausre
by Htback
2
Heavy Exports Weighing Down SoybeansSoybean is among the world’s most traded crop. It is used in various industries. Soybean drives global food prices. It can tilt trade balances of an entire nation. This paper describes the importance of Soybean. It lists key producers, consumer and maps the harvesting cycle across the calendar by top producing countries. Given rising Brazilian exports, higher US planting, and asset manager’s positioning, this paper articulates a case study for a short position in CME Soybeans Futures delivering a 1.3x reward to risk with entry at USc 1,452.5/bushel and target of USc 1,350/bushel hedged by a stop at USc 1,530/bushel. SOYBEAN IS THE WORLD’S MOST TRADED GRAIN Soybean is high in protein. Hence, it is a key component of livestock feed for meat & dairy production. Rising consumption of the latter two continues to push Soybeans demand. Two-thirds of Soybean is used for crushing into oil and meal. Soybean oil is among the most widely used vegetable oils. It is also used as biodiesel. The two American continents form 80% of global production. Brazil (42%) and the US (31%) are the two largest producers of Soybeans. Argentina is a distant third (7%). China drives demand. It is the largest importer of Soybeans. It comprises 60% of global imports. Soybeans is used to feed China’s massive livestock. Soybean prices are cyclical and prone to price shocks. HARVESTING CYCLE, WEATHER & TRADE POLICY HUGELY INFLUENCES PRICES Prices vary through the year. It is lowest at harvest. Increases during the year with rising inventory holding costs. Harvest seasons are spread differently across North & South America. US harvest is from September to November. While the Brazil & Argentina harvest from March until June. Not surprisingly, Brazilian and US harvest has an enormous impact on Soybean prices. Actual production deviating from expectations in these two majors can send prices surging or tumbling. Soybean prices since 2015 is visualised below. Prices have structurally moved up. Prices have surged driven by robust demand since 2020. Soybean prices on average have ranged 14% from its lowest to the highest over the last eight years with large price gyrations in 2016 and 2020. Price behaviour during and post-harvest since 2015 is visually described in the heatmap below. All things being equal, Soybean prices trend lower during harvesting followed by price recovery post-harvest. However, each year presents idiosyncratic conditions related to weather, trade policy, yield and output, causing price fluctuation. Beyond the harvest cycle, climate has a significant impact. North and South America is heavily affected by El Niño-Southern Oscillation which is a natural climate pattern causing hotter/dryer climate every three to seven years. El- Niño also elevates the chances of droughts and floods. Demand for Soybean Oil is also impacted by supply and demand of other vegetable oils like Palm Oil due to substitution effect. Global trade policy has a considerable influence too. Trade restrictions can disrupt global supply-demand balance, resulting in increased volatility. HIGHER PLANTING IN US, RISING BRAZILIAN EXPORTS, AND FALLING YIELDS IN ARGENTINA USA : In its recent Market Outlook, the USDA reported that US farmers were planning to plant marginally higher than last year but below market expectations. As per National Oilseed Processors Association (NOPA), soybean crushing spiked to a 15-month high and the second highest level for any month on record in March. The crushing pace jumped as processors bounce back from maintenance related downtime. Brazil : Soybean exports from Brazil surged 42.5% YoY during the first half of April. Bean prices have trended lower on larger than expected supply. Argentina : USDA reduced its forecast of Argentina’s soybean crop to twenty-seven million metric tons down from thirty-three million metric tons last month. Argentina’s soybean yields sunk to historical lows last week as per Buenos Aires Grains Exchange’s (BAGE) weekly report. BAGE warned that its projection, currently at twenty-five million metric tons, could be reduced if yield remains suppressed. COMMITMENT OF TRADERS REPORT Two-thirds of soybean crop is crushed into oil and meal. The crush spread, also sometimes referred to as simply the crush, refers to the difference between the value of soybean meal and oil and the price of soybeans. The “crush” is gross processing margin from crushing soybeans. As such, these three products are deeply intertwined. Asset managers have reduced net longs in all three contracts since the start of 2023. Intriguingly, asset managers have reduced net longs much more sharply for Oil and Meal relative to Soybeans. TRADE SET UP Four key drivers at play. First, rising supply from Brazil. Second, higher planting by US farmers. Third, bearish asset manager positioning. Finally, first three offset by marginal impact of lower yields in Argentina. In forming a holistic view, this paper posits a short position in CME Soybeans July contract. Each lot provides exposure to 5,000 bushels (~136 tons). Prices are quoted in U.S. cents per bushel. Minimum price fluctuation (tick) is one-fourth of one-cent. Therefore, every tick represents a change of USD 12.50 per lot. ● Entry: USc 1,452.5 ● Target: USc 1,350 ● Stop: USc 1,530 ● Profit at target: USD 5,125 ● Loss at stop: USD 3,875 ● Reward-to-risk: 1.3x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CBOT:ZSN2023Short
by mintdotfinance
On a sugar high, owing to weak supplySugar prices have soared this year, up +21.6%1 owing to concerns about tight global supplies. Lower Indian supply coupled with weaker than expected output from Thailand, (at the second and third largest sugar exporters respectively) continue to provide a tailwind for sugar prices. While Brazil’s harvest in the coming months is expected to be strong, logistical hurdles owing to higher exports of soybean and corn could restrict supplies over the coming months thereby supporting sugar prices higher. Net speculative positioning on sugar is 139% above the 5-year average2. Over the past month, short positioning has declined 16% highlighting the improvement of sentiment on the sugar market. Weaker sugar supply from India India is one of the largest exporters of white sugar, but shipments are controlled by quotas. The Indian Sugar Mills Association (ISMA) latest report indicate that Indian sugar production fell marginally to 28.2mt so far this season through 15 March3. ISMA cut its sugar production estimate for 2022/23 crop year to 33.5mn tons from 34.5mn tons on account of lower output and more use of sugarcane for biofuel. Sugarcane processing in Maharashtra, the most important growing state, could end 45-60 days earlier than last year because heavy rainfall has reduced the availability of sugarcane. Sugar production in Maharashtra is likely to total a mere 12.8mn tons according to the chief of State’s sugar commission, nearly 1mn tons less than previously anticipated. Lower sugar output is raising concerns that the India government could restrict additional exports. More use of sugar diverted to India’s Biofuel program At the same time, Indian Prime Minister Narendra Modi is pursuing an aggressive biofuel program that will see more sugar cane diverted to make ethanol to help curb air pollution and reduce oil import bill. The biofuel program also lies in the interest of farmers by making use of excess local production and boosting their incomes. This season, the government plans to divert 5mn tons of sugar to make ethanol, up from 3.6mn tons a year earlier4. The eventual goal is to divert 6mn tons annually toward fuel production by 2025. Lower sugar production in Thailand remains price supportive for sugar Thailand’s Office of the Cane and Sugar board confirmed that Thailand crushed 93.88mt of sugarcane in 2022/23, lower than the initial estimates for more than 100mt of cane5. As a result, the bumper crop expected in Thailand is also falling short, resulting in 2022/23 total sugar output in Thailand will be at around 11mn tons (versus the 12mn tons expected earlier in the season)5. Lower than expected output from Thailand combined with less supply from India remains price supportive for sugar. The front end of the sugar futures curve remains in backwardation yielding a positive roll yield of 2.9% reflecting tightness in the market for short term balances. Logistical bottlenecks could restrict supply from Brazil Looking ahead, progress of the sugar crop in the Centre- South region of Brazil remains a key headwind for sugar prices. Brazil sugar production is expected to be over 36.5mn tons in 2023/24, only slightly less than the all-time high of 38.4mn tons seen in the 2020/21 marketing year6. However, shipping Brazilian sugar could face delays in the Port of Santos as it competes with exports of other Brazilian grains such as corn and soybean. Road freight is also likely to face significant price increases. Santos terminals receive sugar and grains by trains and trucks. However, competition from transporting soybeans has been taking space away from sugar in train cars. Higher freight prices impact the margins of the mills. Likelihood of El Niño, if realised, remains price supportive for sugar With La Niña over, there is now a chance the Pacific Ocean surface could warm later this year and spark what is called El Niño. The US Climate Prediction Centre has raised the likelihood of an El Niño emerging between August and October to 74% from 61% a month ago. One common knock-on effect is higher precipitation volumes which would be positive for sugar prices over the medium term with fewer milling days and sugar production. El Niño could bring relief to drought parched areas of Argentina and southern US, but it could also lead to hotter and drier conditions in parts of Asia and Australia. Conclusion Restricted supply from India alongside lower supply from Thailand have helped sugar along its upward journey so far. Looking ahead, with the Argentinian soybean crop forecasts struggling in the face of the ongoing drought, we expect Brazil to do a lot of the heavy lifting by offsetting the shortfall in supply of both soybean and corn. This is why, logistical hurdles are likely to impede the supply of Brazilian sugar thereby supporting sugar prices higher over the medium term.
ICEUS:SB1!
by aneekaguptaWTE