Brazil soybeans export accelerates in March: trade department

Brazil shipped out 7.18 million mt of soybeans in the first three weeks of March, up 102% month on month, the Brazilian foreign trade department said.

Despite the US-China phase one trade deal, signed January 15, Chinese crushers still prefer the more price-competitive Brazilian beans over the US-origin, market sources said. Additionally, profitable crush margins have encouraged Chinese soybeans buyers to continue covering their old crop and new crop demand.

China is world’s largest soybean purchaser and the primary market for the world’s largest soy supplier.

Brazil’s soy exports so far in March have averaged 479,200 mt/day, compared with 445,200 mt/day in the same period last year, according to the foreign trade report.

Soybean traders in Brazil are bullish despite the global economic slowdown from the coronavirus pandemic, sources said.

The forecast for an all-time high soybean harvest in the 2019-20 crop year (September-August) could help the price competitiveness of Brazilian beans in China and the EU — the world’s top soy importers. Brazilian national agro agency Conab forecast 2019-20 soybean output at 124.2 million mt, up 8% year on year, in its latest report.

The price of SOYBEX FOB Santos for May loading was assessed at $ 352.76/mt Monday, while SOYBEX FOB New Orleans was at $353.11/mt.

Another factor favoring South American soy farmers is the timing of exports. The period of February-May is seen as peak season for the Brazilian soybean harvest and sales, while the new US soybean crop planting only starts in April.

The Brazilian soybean harvest has picked up a brisk pace in March on favorable weather across the country since November, despite dry weather led delays to the planting season in September 2019.

As of March 19, the soybean harvest has reached 66% of the projected area of 36.4 million ha in the 2019-20 crop year (September-August), almost at par with the five-year average, agricultural consultancy AgRural said on Monday.

For the past few years, Brazil has exported 80% of its beans to China. But the phase one trade deal could severely limit Brazilian soybean sales to China in the coming months.

China could start buying more soybeans from the US in the latter half of 2020, once the US harvest starts, a top US trade official said. Under the deal, Washington expects Beijing to start purchasing larger amounts of US beans to fulfil China’s commitment to buy $80 billion of agro products within two years.

Soybean purchases are a vital aspect of the phase one deal, since soybean comprises over 50% of annual US agricultural exports to China, while pork, beef and poultry comprise just 5%, 4% and 2%, respectively, according to the US Department of Agriculture.

Another important factor, which could be more severe for Brazilian soybean exports, is the coronavirus pandemic. This could severely limit China’s demand for soybeans, market sources said. China’s supply chain has been hit hard by the virus, which could severely limit the transportation of agro commodities across the country.

Echoing this sentiment, Conab has forecast significant challenges in the coming months for Brazilian soybean exports due to the US-China trade deal and the coronavirus pandemic.

The South American nation is expected to export 72 million mt in 2019-20, up 3% year on year, Conab said in its December report, without factoring the coronavirus impact.

However, market participants expect Brazil’s total soy exports in 2020 to be revised lower in the coming weeks due to the pandemic, which has already started to cause issues at its primary ports of Santos and Paranagua.

Platts