July 11, 2013

Brazil's soy exports slowdown in June

After reaching a record monthly pace during May as much of that country's record 2012-13 crop has now moved into the market, Brazilian soy exports have started to slow.

Brazil exported 6.57 million tonnes of soy in June, down from 7.95 million tonnes in May, according to data released by that country's trade ministry on Monday (Jul 8).

Brazil's trucking union is holding a 72-hour strike that might delay movement of further soy and corn crops to ports, but the action, which is due to end on Thursday (Jul 11), will not affect exports. Exporters have sufficient stocks at ports to continue loading.

Protests slowed traffic into Brazil's main grain and soy export port of Santos on Monday and Tuesday (Jul 8 and 9), but exports were continuing as normal, according to the Santos Port Authority, which manages the port's public corridor.

Brazilian producers have sold about 78% of their 2012-13 soy crop, up from 71% in late May, but behind the 92% of the previous crop that had been sold a year ago, according to Brazilian market consultant Safras & Mercado. This data suggests producers are still holding roughly 18 million tonnes of soy.

Producers sold about 60% of the crop before it was even planted late last year, taking advantage of high prices following the US drought, but sales then slowed as soy prices fell, before picking up last month on stronger Chicago futures prices, Safras said.

Weakness in the value of the Brazilian real against the dollar also likely helped boost sales. The real depreciated by about 4% against the dollar during June. The weakness of the real will boost Brazilian production costs for 2013-14, though, as most inputs are imported and priced in dollar terms. IMEA, the state agricultural economics institute for Brazil's largest soy-producing state of Mato Grosso, now estimates that production costs there will rise more than 21.5% for the 2013-14 crop.

Despite the higher costs, Brazilian soy plantings should continue to expand due to firm prices over the past couple of months and increased government financing for producers.