Brazil’s soybean exports plunge 34% so far in July on tight supply

Brazil’s soybean exports slumped 34% on the month in the first three weeks of July, according to the country’s trade data, with sources signalling hoarding of stocks by farmers on expectations of price rise in the second half of the year.

Brazil’s soybean farmers are holding on to their crops and waiting on the US soybean weather, which is expected to dry up in the coming weeks and push international soybean prices higher, market sources told S&P Global Platts. Farmers’ soy hoardings, however, have led to supply bottlenecks at Brazilian ports.

Platts assessed SOYBEX FOB Santos at $382.43/mt for August loading on July 20, compared with the July average of $366.69/mt.

Brazil’s foreign trade department data released July 20 showed soybean exports fell to 6.18 million mt over July 1-19, compared with 9.36 million mt exported in the first three weeks of June.

Due to a weak Brazilian real, the country has already sold over 92% of its soybean crop for the current marketing year from February 2020 to January 2021 as of July 3, up 18 percentage points from a year ago, market sources said. It has also forward contracted almost 40% of next year’s crop, a year-on-year rise of 20 percentage points.

The Brazilian currency has lost 43% of its value against the US dollar in the last 12 months, making Brazilian soybeans extremely competitive in international markets.

The real fell to as low as 5.89 against the dollar on May 12, a slump of 45% from a year ago, before making a brief recovery which lasted till June 8. The currency, however, has lost ground since then and is currently valued at 5.33 to the dollar.

Brazilian soybean exports in July is expected to rise up to 7% on the year due to high Chinese demand, which is estimated to comprise 70% of total soy shipment, market sources told Platts earlier. Based on the port lineups, Brazilian soybean export in July is projected at 8.5 million mt.
Robust China demand

According to Brazil’s trade report, its soybean exports — which spiked 47% year on year to average 475,905 mt/d so far in July — had hit monthly record highs of 16.3 million mt and 15.5 million mt in April and May, respectively, with the majority of overall exports bound for China each month.

In the first half of this year, Brazil exported 61 million mt of soybeans, up 38% on the year, with 72% of these shipments purchased by China.

With August and September demand covered, Chinese buyers are now mostly focused on booking October soybean shipments from both the US and Brazil, a China-based trader said.

Brazil is expected to export over 80 million mt of soybeans in the 2019-2020 local marketing year, which runs from February 2020 to January 2021, up 7% on the year, according to market estimates.

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