July 23, 2020

Brazil's soybean exports dive 34% in July

 

In the first three weeks of July, Brazil's soybean exports plunged 34% on the month, the country's trade data showed, S&P Global reported.

 

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 US$382.43/tonne for August loading on July 20, compared with the July average of US$366.69/tonne.

 

Brazil's foreign trade department data released July 20 showed soybean exports fell to 6.18 million tonnes over July 1-19, compared with 9.36 million tonnes 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 tonnes.

 

According to Brazil's trade report, its soybean exports—which spiked 47% on-year to average 475,905 tonnes/day so far in July—had hit monthly record highs of 16.3 million tonnes and 15.5 million tonnes 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 tonnes 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 tonnes of soybeans in the 2019-2020 local marketing year, which runs from February 2020 to January 2021, up 7% on-year, according to market estimates.