Movement of soy intensifies at Paranaguá, while China orders more U.S. soy

The US Secretary of Agriculture, Sonny Purdue, expressed joy via a Tweet (shown below), as China pledged to purchase another 10m tons of US soybeans last Friday. With the fresh Brazilian harvest hitting the roads, Brazil’s largest soybean producer, Bom Futuro Group, is issuing a warning to farmers of impending losses in the sector. However, US-based agriculture broker, McDonald Pelz,  believes China might prefer the freshly-harvested Brazilian crop over old-crop soybeans from the United States. As of last week, China had only imported 7.4m tons of the last US soybeans harvest, compared to 26m tons for the same period last year.

BREAKING: In Oval Office meeting today, the Chinese committed to buy an additional 10 million metric tons of U.S. soybeans. Hats off to @POTUS for bringing China to the table. Strategy is working. Show of good faith by the Chinese. Also indications of more good news to come.

— Sec. Sonny Perdue (@SecretarySonny) February 22, 2019

It is too early to predict if Brazil will dominate the market this year; however, movement is growing at one of Brazil’s main grain hubs, the Port of Paranaguá. Around 1,700 trucks are passing through the Port of Paranaguá grain terminal daily and the number is expected to rise to 2,000 trucks by the beginning of March. A total of 27 vessels have left Paraná loaded with soy this year (as of yesterday). Datamar data shows most of the soy cargo is destined to the ports of China. The following Marine Traffic map shows the density of grain vessels near Paranaguá:

According to Portos e Navios, the Port of Paranaguá has already shipped a total of a 2.7m tons of soybean, corn, and soymeal using three berths of the Paranaguá Export Corridor, and berth 201 and 204 this year. On Tuesday, six vessels were waiting offshore to move 319,100 tons of soybeans from the port. One of the greatest advantages of Paranaguá port is there is practically no waiting time relayed to the vessels. The port can receive three bulk vessels at berth 212, 213, and 214 simultaneously.  A total of twenty-one companies move grain in the port – 10 private terminals and 11 public that operate within the structure of the port.

The following DataLiner graph shows the Port of Paranaguá soybean export trends for the last ten years:

After Washington and Beijing decided to call a truce on December 1, the two countries are trying their best to thrash out deals to end the trade spat. According to CEPEA (Center for Advanced Studies on Applied Economics), Brazil’s soybean prices have fallen by 20% from last year’s peak in September due to improved trade relations between the two countries.  Moreover, the outbreaks of African swine fever in China could possibly dent demand for soybeans used to make animal feed.

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