INTERVIEW: Brazil can change trade flow pattern of grains, oilseeds, says IGC director

Brazil has emerged as an "important operator" in the global supply of corn and soybeans, and with its widening export window, the South American country "can change the pattern for trade flow," said Arnaud Petit, director of International Grains Council.

"Until now, Brazil was only exporting in March, while the US exported primarily between September to November. But now, Brazil can export longer throughout the marketing year. That's something new," Petit told S&P Global Commodity Insights at the IGC Grains Conference in London June 13.

Brazil is the world's largest producer and exporter of soybeans, with the current MY 2023-24 output estimated at 153 million mt, down 5.5% on year, according to the US Department of Agriculture.

Similarly, Brazilian exports of the oilseed for MY 2023-24 are estimated at 102 million mt, up 6.8% on the year.

The USDA projects Brazilian corn production for the ongoing crop season at 122 million mt, down 11% from its record output of the preceding season, which helped it overtake US as the largest producer of corn in the world.

When asked whether Brazil can continue to be an important driver of world total grains outlook, Petit said that Brazil's position could change in the coming year.

"Until now, we have seen Brazil exporting a lot of commodities, like corn and soybean, and it also an important operator for biofuels. But the situation can change a bit," Petit said.

Increasing domestic demand in Brazil will put a pressure on its exports, Petit said.

Brazil's corn is expected to see an increasing demand in the domestic market, with corn for ethanol usage going up to 17 million mt in the next season, according to a source.

Although China continues to be Brazil's main export destination, the South American country's excessive supplies will need more diversification, Petit said.

"Brazil has to convince China to think about soymeal, and the same for corn in terms of DDGS," Petit said.

"Brazil does not have enough livestock, so the trade pattern has to change [from just corn and soybeans to by-products]," he added.

Between May 2023 to May 2024, Brazil exported a total of 53.1 million mt for corn, out of which about 16.8 million mt, or 31.6%, went to China alone, data from S&P Global Commodities at Sea showed.

Over the same period, Brazilian soybean exports stood at 95.5 million mt, with China making up for 72.6 million mt, or 76%, of the total outflows, according to CAS.

Brazil heavily relies on China for exports. A diversification of supplies, with the addition of by-products for corn and soybeans can provide a boost to the country's trade flow when the domestic market is tight.

Competition from rivals

"Brazil will be in competition with strong operators. For soymeal, Argentina is a strong operator, very competitive. There will also be other rivals," Petit said.

Argentina is the world's largest exporter of soymeal, with MY 2023-24 estimated at 24.4 million mt, compared to 21.1 million mt for Brazil.

Petit said that besides corn and soybeans, Brazil should also find new opportunities in wheat.

The USDA estimates Brazilian wheat production in MY 2023-24 at 8.1 million mt, while exports are seen at 2.8 million mt.

For MY 2024-25, the USDA projects a 17.28% growth in Brazilian wheat production, alongside a 7.1% rise in exports.

Asia is the main destination for Brazilian wheat exports, with a net volume of 1.2 million mt going to Vietnam, 1.1 million mt to the Philippines, and 264,084 mt to Thailand between May 2023 and May 2024, according to CAS.

Platts, part of Commodity Insights, assessed corn FOB Santos for August loading at $205.30/mt June 13, up $1.87/mt from the previous assessment while the SOYBEX FOB Santos soybean contract for July loading was assessed at $453.62/mt June 13, down 28 cents on the day.