Brazil steals part of US soybean sales amid American harvest

Brazil is stealing part of the share of the sales of US soybeans, which have lost competitiveness in the global market due to the historic drought in the Mississippi River and the high dollar quotations.

The low water level in the Mississippi River, which halts the flow of barges in the path taken by US soybeans to the Gulf and makes domestic freight more expensive, has raised the US export prices, redirecting part of the Chinese demand to Brazil.

China bought six ship-load of soybeans in November, half from Brazil and the other from the US, according to Arlan Suderman, the chief commodity economist at StoneX. Traditionally, China buys almost exclusively from the US, which offers the cheapest soybeans during the harvest at this time of the year.

See below the track record of the volume of soybeans (HS code 1201) exported by Brazil between January 2019 and August 2022. Data are from DataLiner.

Soybean Exports | January 2019 – August 2022 | WTMT

Source: DataLiner (click here to request a demo)

This atypical behavior could reduce US exports and increase US carryover stocks, contributing to a bearish scenario for soybean futures prices on the Chicago Stock Exchange, already drawn by weaker demand from China this year and expectations of a record harvest in Brazil from January onwards.

“The US is missing the opportunity to sell as much as it can before Brazil’s harvest – and all signs so far point to a record Brazilian harvest,” said Victor Martins, senior risk manager at HedgePoint Global Markets.

The outlook for US sales could worsen. If US producers take too long to sell, importers may cancel US purchases and opt for Brazil, according to Doug Houghton, an analyst at Brock Associates in Milwaukee.

US soybean shipments for the 2022-23 season, which began Sept. 1, are down 19% from last year.

Argentina is also contributing to harming American exports. At least 8 million tonnes of soybeans were sold in just a few days by Argentine exporters after the local government allowed farmers to receive a more suitable exchange rate.

“Argentina basically ’emerged out of nowhere in this market and dumped a lot of ‘cheap’ soy that China bought,” Suderman explained.

Soybeans

Argentina’s soybeans, which will arrive in China in January, met nearly all of China’s demand until December. The question now is who will supply the world’s largest importer from there.

“Both Brazil and the United States have soybeans to export. The deciding factor will be the price,” Martins said. According to AgRural analyst Daniele Siqueira, Brazilian producers still have approximately 16 million tonnes of the 2021-22 crop to sell.

One area where US soybeans have been doing well: China is buying US cargo to arrive in Asia in February. This is a possible hedge if the Brazilian crop is not as abundant as forecast. Last year, a drought in December reduced the country’s production to the lowest level since 2018-19.

Last week, China booked 13 US cargoes for shipment in December and January, according to various market sources.

Source: Money Times

To read the full original article, please go to: https://www.moneytimes.com.br/brasil-rouba-vendas-de-soja-dos-eua-em-plena-colheita-americana/

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