Brazil's soybean exports slumped 41% on the month in August, according to the country's trade data, with sources signaling stockpiling by farmers amid expectations of price rises in the coming weeks.
Brazil's soybean farmers are holding on to their crops and waiting on the dry weather in the US, which has pushed international soybean prices higher, sources told S&P Global Platts.
While US soybean futures are trading in a range of $9.50/bu to $9.60/bu for September and November at the Chicago Board of Trade, bean prices in Brazil are even higher, averaging $10.70/bu in the week that ended Aug. 29.
Farmers' hoarding, however, has led to supply bottlenecks at Brazilian ports.
Platts assessed SOYBEX FOB Santos at $414.76/mt for October loading on Sept. 1, up 6% month on month.
Brazilian government data released Sept. 1 showed soybean exports fell to 6.2 million mt in August from 10.5 million mt in July.
Due to a weak Brazilian real, the country had already sold over 95% of its soybean crop for the current marketing year — which will end January 31, 2021 — by Aug. 7, up 15 percentage points on the year, sources said. It has also executed forward contracts for almost 45% of next year's crop, a year-on-year rise of 20 percentage points.
The Brazilian currency has lost 29% of its value against the US dollar in the past 12 months, making Brazilian soybeans extremely competitive in international markets.
Backed by said weak real, Brazilian soybean exports in August were still 1.2 million higher on the year.
Strong Chinese demand
According to the Brazilian government data, the country's soybean exports — which spiked 30% year on year to average 296,789 mt/d in August — hit monthly record highs of 16.3 million mt and 15.5 million mt in April and May, respectively, with the majority of those volumes bound for China.
In the first eight months of this calendar year, Brazil exported 76 million mt of soybeans, up 36% on the year, with 73% of these shipments purchased by China.
Brazil is expected to export over 82 million mt of soybeans in the marketing year that will end January 31, 2021, up 8% on the year, according to market estimates.
With October demand covered, Chinese buyers are now mostly focused on booking November and December soybean shipments from Brazil, a China-based trader said. However, the US is expected to be the primary oilseed supplier starting in September.
Despite the ongoing diplomatic spats between Beijing and Washington, China is expected to shift away from Brazilian output and purchase large volumes of US beans from September onward, when the US soy harvest begins, sources said.
Tight supplies of Brazilian soybeans in the second half of 2020 are seen as a boost to US bean exports.
With limited Brazilian soybean availability until January 2021, the market expects US soybeans to be competitive and sell at an average discount of over 40 cents/bu to their South American counterparts until the Brazilian harvest begins in February 2021.
