Brazil soybean exports set to spike in April

New Delhi — Brazil shipped out 6.3 million mt of soybeans in the first half of April, up 50% month on month, according to the Brazilian foreign trade department.

Backed with a good soy harvest pace and increased demand from Chinese crushers, Brazilian soybean exports could continue to rise in coming weeks, a market source said.

Another factor favoring Brazilian soy farmers is the timing of exports. The period of February-May is seen as peak season for the country's soybean harvest and sales, while the new US soybean crop planting only starts in late April.

Soybean harvest pace in the South American nation has reached 89% of the projected area of 36.4 million ha in the 2019-2020 crop year from September to August, as of April 9, up 1 percentage point year on year, AgRural said Monday.

Despite the US-China phase one trade deal, signed January 15, Chinese crushers still prefer the more price-competitive Brazilian beans over the US-origin, market sources said. Additionally, profitable crush margins have encouraged Chinese soybeans buyers to continue covering their old crop and new crop demand.

For May and June, China's average soy import coverage is estimated to be in the range of over 95%, market sources said. In fact, Chinese buyers are now mostly focused on booking July and August shipments of cheaper Brazilian beans.

Brazilian soybeans have gained price advantage over their main competitor, US-origin beans, in recent weeks because of a record high average output forecast of 123 million-125 million mt by sector analysts.

A falling Brazilian real, which has lost almost a third of its value since January, has added to Brazilian soy's price competitiveness.

Market participants said Brazilian soybeans were currently selling at a discount of 30-40 cents/bushel to US beans at Chinese ports.

S&P Global Platts assessed SOYBEX FOB Santos for May loading at $340.72/mt Monday, while SOYBEX FOB New Orleans were assessed at $344.01/mt.

Brazil is expected to export 72 million mt in 2019-20, up 3% year on year, Conab said in its December report.

Market participants believe the country's soy exports in 2019-20 could rise due to pandemic-fueled Chinese buying spree and the free-falling Brazilian real.

The US Department of Agriculture has already increased its Brazilian soybean exports forecast for 2019-20 to 78.5 million mt, up 5% year on year, in its latest World Agricultural Supply and Demand Estimates report.