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New Delhi — Brazilian soybean exports in 2019-20 crop year (September-August) could be unaffected by the coronavirus pandemic, as the world's largest oilseed supplier has already sold 75% of the crop, according to market sources, with China the top buyer.

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With a strong harvest pace, Brazilian farmers have been able to sell their produce swiftly.

As of April 2, Brazil's soybean harvest had reached 83% of the 2019-2020 crop year projected area of 36.4 million ha, compared with a five-year average for this point in the year of 82%, agro consultancy AgRural said Monday.

While in February, the country exported over 5 million mt of beans, down 2% year on year, it shipped 11.6 million mt in March, up 38% year on year, according to a Brazilian trade department report released last week.

According to the market participants, despite the Phase 1 trade deal it signed with the US on January 15, China has been incessantly buying Brazilian soybeans. Under the deal, China has committed to purchasing $80 billion-worth of US agricultural goods within two years, primarily soybeans.

As the pandemic continues to spread, China has started to ramp up its soy purchases, sensing future uncertainties, market sources said. Therefore, Chinese crushers have turned their focus to cheaper South American beans.

Skepticism hovers over port operations in the Americas amid pandemic fears, as trucking and port unions have threatened to shut operations due to quarantine measures and contagion concerns.

While port authorities say they are maintaining normal operations, there is a high probability of strikes and shutdowns if the pandemic death toll mounts, sources said. The novel coronavirus has already claimed over 75,000 lives worldwide.

China's soybean purchases from Brazil have accelerated to cover any pandemic-related uncertainties in the coming months. In the first three months of 2020, world's largest soybean importer bought 13.3 million mt of beans from Brazil, up 10% year on year, according to the Brazilian trade department.

Even for the coming months, China does not seem to be taking any pandemic-related supply-side risk. For May and June, its soy imports coverage is estimated to be in the range of 90%-95% and 85%-90%, respectively, market sources said.

Falling currency a boon

The consistent depreciation of the Brazilian real against the US dollar has made Brazilian soybeans attractive in international markets. In Brazil, soybeans are priced in dollars, but paid in Brazilian real. The depreciation leads to higher domestic prices for local farmers, and higher profit margins.

The real has depreciated about 30% since the start of 2020 and it is currently trading at about Real 5.23/$.

With the fall in the value of the local currency, soybean farmers are earning high profit margins, which is further boosting their soy sales overseas, including to China, a market source said.

According to a Brazilian analyst, the real's weakness and a record Brazilian soybean output forecast for 2019-20 have made Brazilian soybeans very competitive against US beans.

While SOYBEX FOB Santos was assessed Monday at $338.61/mt for May loadings, the SOYBEX FOB New Orleans assessment was $344.47/mt.

The South American nation is expected to produce 123 million mt-126 million mt of soybeans in 2019-20, an all-time high, and export 77 million mt-78 million mt, up 3% year on year, according to different market estimates.