MercoPress. South Atlantic News Agency

Brazil's soybeans sales to China and soy-meal exports to the EU remain very strong

Brazil could export 9 million tons of soybeans in February, up 80% year on year, on good harvest pace and currency depreciation, Conab said last week.

Brazil, the world’s largest soy producer, and supplier, shipped 3.55 million tons of soybeans in the first three weeks of February, up 367% month on month, according to a report from the Brazilian foreign trade department.

Despite the US-China Phase 1 trade deal, signed on January 15, the Chinese crushers still prefer the more price competitive Brazilian beans over the US-origin, market sources said. According to S&P Global Platts, the price of soybean FOB Santos for April loading was assessed at US$ 345.77/mt, while soybex FOB New Orleans was determined at US$ 350.90/mt on February 28.

Soybean traders in Brazil are bullish despite prevailing global issues, such as economic slowdown and epidemic outbreaks, sources said.

Brazil could export 9 million tons of soybeans in February, up 80% year on year, on good harvest pace and currency depreciation, national crop agency Companhia Nacional de Abastecimento said last week.

Another factor favoring Brazilian soy farmers is the timing of exports. The period of February-May is considered the peak season for the Brazilian soybean harvest and sales, while the new US soybean crop planting starts in March.

Brazilian soybean harvest has picked up a brisk pace in February on favorable weather across the country. The soybean harvest has reached 31% of the projected area of 36.4 million ha in the 2019-20 crop year (September-August) as of February 20, on par with the five-year average, agricultural consultancy AgRural said on Monday.

Soy exports averaged 236,900 tons/day so far in February, from 263,400 tons/day in the same period last year, the foreign trade data showed.

The year-on-year decline in daily soy export volumes could be due to China taking more US-origin soybeans, market sources said, after the two countries signed their Phase 1 deal. Soybean purchases are a vital cog in the deal, since soybean comprises over 50% of annual US exports to China, while pork, beef and poultry comprise just 5%, 4% and 2%, respectively, according to the US Department of Agriculture.

A partial trade agreement between the US — the world’s second-largest soy producer and exporter — and China may not bode well for Brazilian soybean farmers in coming months, who export nearly 80% of their produce to the Asian nation, especially when the Chinese government is struggling with the coronavirus outbreak.

China’s supply chain has been hit hard by the virus outbreak, which could severely limit the transportation of agro commodities across the country, sources said.

Conab has forecast significant challenges in the coming months for Brazilian soybean exports following the US-China Phase 1 deal and the coronavirus outbreak.

Brazil exported 516,900 tons of soybean meal in the first three weeks of February, up 16% month on month, the report said. Despite strong domestic demand for soybean meal, Brazil has managed to export more to the EU. Demand for soy meal in Europe — one of the largest meat producers and exporters — has risen sharply due to increased demand for meat products in Asian nations, particularly China — the world’s largest pork consumer — which culled millions of pigs due to the outbreak of African swine fever, a fatal disease for the swine population.

The EU — the world’s largest pork exporter — purchased 11.57 million tons of soybean meal between the start of the marketing year on July 1, 2019, and February 23, up 2% year on year, out of which Brazil’s share was 46.4%, according to the European Commission released on Monday.