June 9, 2021

Brazil's soybean exports in June expected to overtake 2020's level



Brazil's June's soybean exports are expected to exceed 2020's level amid strong demand from China, which is likely to pressure US soy exports, sources told S&P Global Platts on June 8.


The demand for soybeans in China has soared amid the country's hog herd recovery from the African swine fever.


According to S&P Global Platts Analytics, China is likely to import a record 100 million tonnes of soybeans in 2020-21 marketing year (October-September), with over 60% shipped-in from Brazil.


Brazil, the world's top soy supplier, exported 2.5 million tonnes of soybeans in the first week of June, compared with 3.3 million tonnes in the same period last year, according to Secretariat of Foreign Trade's report released on June 7,


However, the daily shipment average suggested that the country's June soy exports are likely to surpass last year's level.


Daily soybean shipments averaged 0.8 million tonnes in June so far, compared with 0.6 million tonnes in the same period last year, the report said.


A global soybean supply surge is widely expected following Brazil's export spike since April, which should put pressure on US soy futures prices. However, the USDA's forecast for seven-year low US soy ending stocks for 2020-21 marketing year of 3.25 million tonnes have kept the futures prices bullish since March.


CBOT soybeans July futures were seen trading at US$15.6200/bushel on June 8, up 10 cents week on week.


Almost 75% of Brazil's soy shipments are expected to be headed for China in June, analysts said. This is in stark contrast to the first quarter of 2021 when the Brazilian shipment volumes to China were very small.


Brazil typically supplies over 80% of its soy shipments to China between February and July, but due to harvest delays in Brazil and slackening crushing activities in China in Q1, exports on the route were lower than usual.


High soy prices and low crush margins have forced many China-based crushers to operate below capacity since January, analysts said.


Nonetheless, China is expected to ramp up soybean purchases from Brazil, which is selling its beans 30 cents/bu cheaper than US-origin beans.


Until August, Brazil is likely to export record volumes of soybeans to make up for lost opportunities in Q1, market sources said.


Domestic soybean demand in Brazil has been rising since 2020. As a result, the country's oilseed imports have also surged since May.


According to the foreign trade data, Brazil imported 20,000 tonnes of beans in the first week of June, compared with 12,000 tonnes in the same period last year.


According to estimates from market sources, Brazil is expected to produce a record 136 million tonnes of soybeans in the 2020-21 marketing year (February-January) and export an all-time high volume of 85 million tonnes.


- S&P Global Platts