New Delhi — Brazil exported a monthly record volume of 16.3 million mt of soybeans in April, up 73% year on year, according to a report by the Brazilian foreign trade department.
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The average daily soybeans shipment stood at 815,424 mt in April, up 82% year on year, the report said Monday.
A falling Brazilian real, which has lost over a third of its value since January, has boosted Brazilian soy's price competitiveness. Almost 75% of Brazilian soy shipments have been destined for China in the first four months of 2020.
Market participants said Brazilian soybeans were currently selling at an average discount of 20-30 cents/bu to US beans at Chinese ports. However, with uncertainty hovering over major American meat processing and packaging plants due to the coronavirus pandemic-led lockdown, US-origin soy is slated to sell cheaper in the coming days.
Recent diplomatic spat between US and China over COVID-19 mismanagement could also add volatility to soybean futures price in coming days, market sources said.
S&P Global Platts assessed SOYBEX FOB Santos for June loading at $336.04/mt Monday, while SOYBEX FOB New Orleans was assessed at $330.88/mt.
Backed by a good soy harvest pace and robust demand from Chinese crushers to cover COVID-19 related supply-side uncertainties, Brazilian soybean exports could continue to rise in coming weeks, a market source said.
Soybean harvest in Brazil has all but completed, barring a few pockets in southern region, including Rio Grande do Sul.
Another factor favoring Brazilian soy farmers is the timing of exports. Brazilian soybean sales peak during February and May, while September-December is the period when US soybeans harvest gets ready for domestic sales and exports.
Despite the Phase 1 US-China 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 world's largest soybeans importer to continue covering old and new crop demand from Brazil.
For May and June, China's average soy import coverage is almost complete, 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 additional 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.
Brazil is expected to export 72 million mt in 2019-20 local marketing year, which runs from February 2020 to January 2021, up 3% year on year, national crop agency Conab said in its December report.
Market participants believe the country's soy exports in 2019-20 could rise as high as 77 million mt due to pandemic-fueled Chinese buying spree and the free-falling real.
The South American nation has already sold over 90% of current crop, up 20 percentage points on the year, and forward contracted 45% of next year's crop, a rise of 20 points, market sources said.