July 30, 2020 / 9:11 AM / in 15 days

Column: Brazilian exporters unfazed by strong U.S. corn, soy demand

FORT COLLINS, Colo. (Reuters) - Exporters in the United States will have a busy start to the upcoming marketing year after the record or near-record soybean and corn sales this month, though they will have to keep an eye on shipments out of Brazil, which will continue to compete with U.S. supplies well into next year.

Employees working at cargo ship Kypros Land which is loading soybeans to China at Tiplam terminal in Santos, Brazil, Merch 13, 2017. REUTERS/Paulo Whitaker

The South American country is the No. 1 exporter of soybeans and in the top three in corn. Brazil’s soy supplies should soon be winding down to give way to U.S. exports, though next month’s shipments may be at least average or above.

Brazil soy export industry group Anec this week reduced its forecast for July soybean and corn exports, but the numbers remain strong. Anec sees this month’s corn shipments at 5.4 million tonnes, shy of last July’s record of 5.9 million, but easily second-best.

The next three months are usually Brazil’s biggest corn shipping months. Last year’s August-October volume reached a new high of nearly 20 million tonnes, though this year’s total exports are seen lighter than in the previous year.

Anec pegs July soybean exports at 8.4 million tonnes, well short of 2018’s record of 10.2 million. That would place exports since February, when the new harvest began arriving at ports in earnest, at 67.4 million tonnes, some 23% more than 2018’s high for the period.

Industry estimates suggest this year’s Brazilian soy exports around 80 million tonnes or more, which means at least another 12 million would ship over the next few months. As of this week, the shipping lineup shows 5.3 million tonnes of soybeans scheduled to depart in August.

August 2019 exports reached 5 million tonnes, well off the month’s high of 8.1 million tonnes set in 2018, when the U.S.-China trade war was fresh.

China this month has been on a shopping spree for U.S. soybeans to be shipped in the new marketing year starting Sept. 1. Prior to the trade conflict, more than 70% of U.S. October-December exports were to China, so American exporters rely on strong sales in the months leading up.

Brazil has been increasingly encroaching on that period in recent years. Its October-December soy exports reached a record 14.1 million tonnes in 2018 in the wake of the trade war. But the 2019 effort was almost as strong at 13.3 million, and the 2017 showing of 7 million tonnes was a massive record at the time.

If export forecasts are accurate, the math suggests Brazil should not even be able to replicate the 2017 result, which would let U.S. exporters have their familiar time in the spotlight. However, industry estimates for Brazilian exports and production have generally been too low in the past couple years.

Soybean cash prices in top bean and corn state Mato Grosso are unusually strong and have been on the uptrend in recent weeks, and export prices at the port of Paranagua this month hit the highest levels since late 2018. That supports the idea that supplies will soon be exhausted.

U.S. prices are currently favorable for international soy buyers, but next year’s competition is already stacking up as Brazilian farmers sold aggressively with historic weakness in their currency.

Producers in Mato Grosso have sold close to half of next year’s soybean crop, which is well above average pace, if not record. They have also sold about 87% of the corn crop that is hitting the market now, which is above average, and at least 41% of next year’s harvest has been marketed.

Brazilian farmers are expected to harvest a record crop next year thanks to a record area. The year-on-year increase in plantings could be a six-year high.

The opinions expressed here are those of the author, a market analyst for Reuters. 

Editing by Matthew Lewis

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below