New Delhi — Brazil could export 9 million mt of soybeans in February, up 80% year on year, as harvesting continues apace and the value of the real falls, according to the Brazilian national crop agency Companhia Nacional de Abastecimento.
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The pace of the soybean harvest has been brisk in February on favorable weather across the country, the US Department of Agriculture said in its latest weather report.
Brazil is the world's largest soybean producer and exporter.
According to agricultural consultancy AgRural, Brazil's soybean harvest reached 21% of the projected area of 36.4 million ha in the 2019-20 crop year (September-August) as of February 13, up 5 percentage points week on week on favorable weather in the key producing states of Mato Grosso, Goias and Mato Grosso do Sul.
The consultancy also forecast a 1.3% increase in its January estimates of Brazil's soy output to a record 125.6 million mt in the 2019-20 crop year, which is an increase of 9% year on year.
However, the soy production figures for all states will be revised again in March, AgRural said.
Historical weather trends suggest Brazil could experience dry weather in some states in the coming weeks, potentially reducing the total soybean production estimate, sources said.
The Brazilian real continued its decline in early February due to a weak economy and the contagion threat of the coronavirus outbreak. The real hit an all-time low of 4.36 against the dollar on February 12, a depreciation of 6% month on month, Brazilian finance department data showed.
Due to the coronavirus outbreak, which has killed 1,800 people globally so far, Brazilian financial markets have adopted a speculative mode, thus pulling down the Brazilian real, a trade source said.
The falling real could be another important factor that could boost February soybean exports to China -- the world's largest soy importer, Conab said Monday.
Despite the US-China Phase 1 trade deal, signed on January 15, and the subsequent halving of tariffs on US goods, Beijing still maintains an import tariff of 27.5% on US-origin soybeans (not including the base 3% import tariff permitted under World Trade Organization rules), which makes it highly uncompetitive against the Brazilian soybeans.
S&P Global Platts assessed SOYBEX FOB Santos for April loading at $354.50/mt on Friday, and SOYBEX FOB New Orleans for April loading at $352.60/mt.
As long as China's retaliatory tariff of 27.5% on the US-origin beans remains in place, Chinese crushers would prefer Brazilian beans for their price advantage, sources said.