04.
06.20
12:37

How long does Brazil have to keep large soy exports going?

Since February, when the last crop was launched in Brazil, the South American country has exported 47.8 million tons of soybeans. That is 44% more than in the same period of the previous season and similar to how the USA could export in the entire 2019/20 marketing year.
Brazil has thus exported 40% of this year's soybean crop in the past four months. Usually 2/3 of the harvest is carried out. The processing and other uses take the remaining amount, so that only a few beans are carried forward to the following season.
In theory, Brazil should already slow down its exports and thus enable the USA to have a good export season. US soybeans are currently cheaper than Brazilian ones, which is giving US exporters good orders these days.
Since the USA has been arguing with China on many different topics, US soybeans have been cheap. The phase 1 deal, a first part of a bilateral trade agreement between the two superpowers, secures fabulous exports to China from the U.S. agricultural industry. That took pressure off commodity prices in the United States. Despite the disagreement about Beijing's Hong Kong policy and the corona pandemic, both countries remain committed to the phase 1 deal.
Should this change in the current politically heated situation, China would again be more dependent on soybean imports from Brazil. When the trade war between Beijing and Washington began in 2018, market participants were convinced that China would buy Brazil empty. However, this has not been confirmed to date.
China's problem with African swine fever from August 2018 significantly reduced the demand for plant proteins. Now that China's demand for soybeans is picking up again, the calculation has to be done again.
Even though Brazil shipped 11% fewer soybeans to China in the past four months, soybean exports from there remain impressively high. This shows us how efficient Brazil is in agricultural exports. Five years ago, 97 million tons were harvested there, now 120 million tons are the norm. Global demand did not increase as much during this period as the harvest in Brazil.
The Brazilian oilseed association Conab estimates that it will “find” other suppliers in the country. This makes it extremely difficult to make a forecast of how stocks and supplies will develop in South America.
With all the crises the world has recently experienced, the Brazilian currency was devalued and exports became more attractive to farmers in South America. In the past few days, however, the tide has turned on the currency front. The US dollar was devalued, making US exports more attractive.

Source
Hansa Terminhandel GmbH
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