Weekly sales of North American soybeans for export were once again weak and below expectations in this week’s report brought by the USDA (United States Department of Agriculture) this Thursday (25). There were only 210.9 thousand tons, from the 2023/24 harvest, while market expectations ranged from 300 thousand to 600 thousand tons. Throughout the season, the country has already committed 41,493.6 million tons, well below the same period last year, when the total exceeded 50 million.
On the other hand, in Brazil, soybean exports are a record for the month of April and also for 2024. According to figures from Secex (Secretariat of Foreign Trade) reported last Monday (25), Brazilian sales exports, this month alone, reach 10,209.3 million tons, against just over 14.3 million in the whole of April 2023. There are still seven more working days to be counted, which could guarantee, at least, a result similar to the from a year ago.
So far this year, Brazilian exports have already reached 32.3 million tons, surpassing the 30.5 million in the same period in 2023. This is a historic record for the period, according to market consultant Vlamir Brandalizze, from Brandalizze Consulting.
In terms of revenue, export revenue from the soybean complex “in total in reais, this month, reaches R$ 27.3 billion, with still seven business days to go in this month of April, and should knock on the door of R$ 39 billion or more this month”, he says. “This confirms that exports continue at an accelerated pace and registering a historic record for the beginning of the year. The fact is that soybeans remain strong and are becoming Brazil’s largest export product, shipping strong since January, because the harvest started earlier And now, producers have been closing positions to make cash”, he adds.
And it is this movement that justifies the highs that premiums have been renewing in the Brazilian soybean market in recent weeks. According to information from Agrinvest Commodities, new season highs were recorded this Thursday, with China, in fact, very active in purchases in Brazil. “Soybean premiums continue to rise strongly at Fob and CFR”, says Eduardo Vanin, market analyst at Agrinvest. “Margins in China are good for June and July. In Brazil, industries need to extend coverage.”
Vlamir Brandalizze also highlighted the significant improvement in premiums in recent weeks, allowing the formation of better prices and an increase in business with Brazilian soybeans.
This Thursday, according to the specialist, for the May position, in the port of Paranaguá, while the seller asked for 15 cents above Chicago, the buyer offered 5 cents less. A few months ago, these values were much more intensely negative, with more than US$ 1.00 per bushel discount on the CBOT. For June, the buyer pays 15 cents more, the seller asks for 30; in July the buyer offers 25 cents and the seller wants 45; in August, 30 for the buyer and 70 for the seller.
COMPETITIVENESS: BRAZIL x USA
The numbers and movement of premiums also show that the competitiveness of Brazilian soy continues to stand out in the international market, as explained by the director of Pátria Agronegócios, Matheus Pereira.
“Comparing the two main soybean exporting ports (from Brazil and the USA) we still have a discount, today, close to 4% on Fob offers. North Americans do not have many offers available to be shipped due to logistical reasons and this ends forcing the Brazilian product. However, traditionally, our product can be up to 2% more expensive than that of the USA, due to logistics and quality premiums.
Thus, even though Brazilian soybeans were still 2% more expensive than those from the USA, buyers in Asia – especially China – still have a preference for the Brazilian oilseed. Therefore, as Pereira details, there is currently a 4% discount. “To equalize, in a “fair competition”, our offers can increase up to 6% in relation to what they are today – the 4% to zero and another 2% of logistics premium and quality premium, since Brazilian soy has more protein – and yet conditions favor the acquisition of Brazilian soybeans.”
Pereira also highlights that the record for soybean imports by the Chinese in January – with emphasis on the Brazilian grain – February is the second highest level in history, in addition to strong numbers also for March and April. “For May, the month hasn’t even started, and we already have a line of record shipments of ships to be unloaded with our soybeans in Chinese territory.”
The expert also adds that, despite the Asian nation’s soybean stocks being at their highest levels in 18 months in the country’s port area, “this is an indication that China is not stopping buying because it needs the product. I wouldn’t be scared We will break a new record for soybean imports by China this year due to the Asian giant’s appetite and need.”
INTERNAL DEMAND: STRENGTH EXPECTED FOR THE 2nd HALF
In addition to strong export demand, domestic demand is also a little more present at this moment, however, margins in the Brazilian scenario are poor.
“Withdrawals from biodiesel contracts are very slow, putting pressure on margins and also on processing. There are reports that a processor in Mato Grosso is operating at 50% of its capacity because the tanks are full. If this situation is general, processing will begin to fall, which could begin to reduce the supply of bran on the market”, explains Eduardo Vanin.
The director of Pátria corroborates Vanin’s analysis, and projects that the internal demand for the oilseed in Brazil should gain a little more traction in the second half of the year – as happens every year, due to seasonal factors – with the consultancy even estimating growth of domestic consumption from 56.8 to 57.1 million tons. “It’s not as aggressive a jump as happened from 2022 to 2023 – which was almost a 10% increase, but it’s an increase given that total supply shrank in this harvest cycle”, he states.
Matheus Pereira also points out that domestic consumption – not only of soybeans, but also of corn – rarely shows declines, except in years in which production suffers catastrophic losses.
And exports of soybean meal and oil by Brazil, both, have higher volumes than those in the same period last year.
Tags: Soybean premiums test highs Brazil justifying current demand record exports
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