Brazil's soybean exports jumped 33% month on month to 12.24 million mt in the first three weeks of May, latest foreign trade department data showed on May 25.
The falling Brazilian real, which has lost over 40% of its value since January, has boosted the price competitiveness of Brazilian soybeans.
According to the May port lineups, Brazilian soybean exports could reach 14.3 million mt, rising 40% year on year, data from shipping agency Williams showed.
The country's soybean exports had hit a monthly record high of 16.3 million mt in April, and market sources said the outflow could surpass 15 million mt in May, with 75% of the total heading to China.
Brazil's soybean shipments have averaged 0.81 million mt/day to-date in May, an 80% year-on-year spike, according to the trade report.
Market participants said Brazilian soybeans were currently selling at an average discount of 10 cents/bu to US beans at Chinese ports. US soybean shipments are not expected to be price competitive until October, a market source said.
S&P Global Platts assessed SOYBEX FOB Santos for July loading at $344.03/mt on Friday, while SOYBEX FOB New Orleans was assessed at $331.52/mt.
Backed by a good soybean harvest pace and robust demand from Chinese crushers to cover COVID-19 related supply-side uncertainties, Brazilian soybean exports could continue to rise in the coming weeks, another source said.
As of April 30, the pace of the soybean harvest in Brazil had reached close to 100% of the projected area of 36.4 million hectares in the 2019-2020 crop year -- which runs from September 2019 to August 2020.
Another factor favoring Brazilian soybean farmers is the timing of exports. Brazilian soybean sales peak between February and May, ahead of September-December when the US soybean harvest is ready for domestic sales and exports.
ROBUST CHINA DEMAND
According to the Brazilian trade department, the country has exported 33.66 million mt of soybeans in the first four months of 2020, up 34% on the year, with 74% of the beans shipment purchased by China.
Despite the US-China phase one trade deal signed on January 15, Chinese soybean buyers still prefer the more price competitive Brazilian beans over US-origin supply, market sources said. In addition, profitable crush margins have encouraged the world's largest soybeans importer to continue covering their old and new crop demand from Brazil.
With June and July demand covered, Chinese buyers are now mostly focused on booking August and September soybean shipments of cheaper Brazilian beans, a Chinese trader said.
The price advantage of Brazilian soybeans was further boosted by a record high 2019-2020 average output forecast of 122 million-125 million mt by sector analysts.
Brazil is expected to export 72 million mt in the 2019-2020 local marketing year, which runs from February 2020 to January 2021, up 3% year on year, national crop agency Conab said in its December report.
Market participants have suggested that Brazil's soybean exports in 2019-2020 could rise to as high as 78 million mt due to the pandemic-fueled Chinese buying spree and the tumbling real.
Brazil has already sold over 85% of its current year crop, up 20 percentage points on the year, and forward contracted almost 40% of next year's crop, a rise of 20 percentage points over the same period, market sources said.
