GET TO KNOW THE NEW INDEX
This week CTDI and SAFRAS of Brazil launched the world’s first Cash Soybean Index, the:
SAFRAS CTDI Brazilian Soybean Index
This new index is the start of a programme of index launches for CTDI with an initial focus on macro-economic based China commodity futures indices. What’s the big deal?
As the world’s first index for Cash market Soybean prices the index will play a prominent role in benchmarking a key commodity in its primary market. This is a first, acting as the leading indicator for downstream soybean trading activity by sourcing data directly from SAFRAS which is the largest Brazilian provider of price discovery across all domestic cash commodity markets.
Then there is the secondary markets, the playing field for major market movers like Bunge, Cargill, General Mills, Louis Dreyfus, SunOpta and Ventura Foods, to name but a few. This activity now extends well as the exchange traded futures market, for instance CME recently started trading a South American Soybean Futures contracts.
The ability to reference in an index format, the SAFRAS CTDI Brazilian Soybean Index benchmarks what is happening at ground zero giving immediate insight to existing and potential trading activity downstream.
UNDERSTANDING THE SOYBEAN
Soybeans are one of the world’s most important commodities, with multiple uses, but just to take 3 indicates the role it plays in daily life now and the future:
- Human consumption, the oil is processed for cooking, and an ingredient in margarines, and dressings
- Animal feed, High-protein fibre is prepared into animal feed for poultry, pork, cattle, other farm animals and pets
- Biodiesel fuel is cleaner burning than petroleum-based diesel oil. Its use reduces particulate emissions, it is non-toxic, renewable and environmentally friendly.
THE GLOBAL MARKET
• MarketWatch reported in 2019 Global Soybean market was US$128 Billion
• In 2025 this is expected to have grown to US$146 Billion
• Brazil accounts for 37% of global soybean exports
According to the University of Illinois, 2021 has heralded a stream of good news for Soybean market participants:
• Soybeans are the most important cash crop cultivated in Brazil, accounting for an estimated 35% of local agricultural production value in dollar terms
• Soybeans prices are selling at highs in Brazil because of strong internal and external demand
• Rising prices on the Chicago Mercantile Exchange coupling a weak Brazilian real couple with a stronger U.S. dollar
• Prices rising just as Brazil, the world’s largest soybean producer achieves a new record harvest
CHINA & THE BRAZILIAN SOYBEAN
• China, the world’s top buyer of soybeans, in 2020 brought 10.48 million tonnes of the oilseed from top supplier Brazil, down from 10.51 million tonnes (Reuters)
• China imports soybeans to crush into soymeal to feed livestock, and soy oil for cooking oil
BACK TO THE INDEX
Given the underplayed yet important role the humble soybean plays in the global economy, and as a bellwether for changing world trade flows from North/South to East/South, the SAFRAS CTDI Brazilian Soybean Index provides an understanding of the changes in primary market prices that drive costs all the way to food tables worldwide.
To know more about SAFRAS and CTDI get in contact with them.
To access the data visit www.marketdesk.com
Keiren Harris 15/08/2021
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Important Note: For disclosure I have an interest in CTDI.