Firm demand and lower inventories push up prices in Brazil

Cepea, August 16, 2021 – Soybean prices continued to rise in the Brazilian market in the first fortnight of August, influenced by the high demand from the international market, higher demand from Brazilian processors and expectations for lower ending stocks in South America. Besides, with Paraná River (which crosses Brazil, Paraguay and Argentina) at low levels, agents are worried about fluvial exports in Argentina, largely from the ports of Rosário and San Lourenzo. It is worth to mention that this situation is not expected to change in the short and mid-terms.


Thus, importers of soybean by-products are focused on the Brazilian market. The USDA estimates Argentina to export 3.7 million tons in the 2020/21 season, the lowest since the 2017/18 season. Thus, this season, Paraguay has become the third major soybean-exporting country in the world, able to export 6.6 million tons of soybean, according to data from the USDA.


Soybean exports from Brazil and the United States are estimated by the USDA at 82.5 million tons and 61.5 million tons, respectively, in line with that previously reported. China is expected to import 97 million tons of the product in the 2020/21 season, 1% more than that previously estimated.


Consumption in Brazil is estimated at 49.4 million tons, a record. In Argentina, consumption is forecast at 48.7 million tons, 6.7% up from that in the previous season.


Thus, ending stocks in Brazil are estimated at 26.1 million tons until the end of September/21, 0.9% down from that reported in July. In Argentina, ending stocks are forecast at 25.3 million tons by the end of March/22, 0.78% down in the same comparison.


In that context, soybean prices increased in the Brazil in the first fortnight of August, also influenced by the dollar appreciation against the Real, which makes the Brazilian product more attractive to importers.


In the Brazilian market, between July 30 and August 13, the ESALQ/BM&FBovespa Index Paranaguá rose by 2.46%, to 172.19 BRL (32.84 USD)/bag on August 13. In the same comparison, the CEPEA/ESALQ Index Paraná increased by 3.8%, to 169.81 BRL (32.39 USD)/60-kilo bag.


SOYBEAN MEAL – With higher international demand for soybean meal, the USDA revised up the volume to be exported by Brazil, by 7.5% compared to that previously reported, to 17.2 million tons. Argentina is forecast to export 28.5 million tons of the by-product, 0.88% up from that estimated in July.


2021/22 SEASON – Estimates for the world soybean output in the 2021/22 season were revised down from 385.52 million tons to 383.62 million tons. For Brazil and Argentina, forecasts were kept at 144 million tons and 52 million tons, respectively.


EXPORTS IN JULY – The international demand for the Brazilian soybean meal increased again in July, boosting the national exports of this by-product to the highest volume shipped since 2004. This scenario resulted in higher export premiums, lower supply from the industry to the domestic spot market and meal valuations in Brazil.


According to data from Secex, in July, Brazil exported 1.987 million tons of soybean meal, the highest volume since June 2004, when shipments to the international market surpassed two million tons. This year (between January and July), the Brazilian exports of soybean meal have totaled 10.15 million tons, 0.5% down from that in the same period of 2020, according to Secex.


The major destination for the Brazilian soybean meal in July was Indonesia, which imported 301.97 thousand tons of the product (15.2% of the total volume exported in the month), followed by Thailand (13.5%). Other significant destinations were Vietnam (9.9%), Spain (9.1%), Germany (8.3%), South Korea (7.9%), the Netherlands (7.1%) and France (5.7%). Other 23 countries purchased, altogether, 23.3% of the total amount exported last month.


As for soy oil, in July, Brazil exported the lowest volume since February/21, of 98.46 thousand tons, 35.93% below that shipped in June and 12.79% less than the volume exported in July/20. This year, soy oil exports have reached 782.4 thousand tons, 0.82% down from that in the same period last year (Secex).


In the region of São Paulo (SP), soy oil prices (with 12% of ICMS) dropped by 1% between July 29 and August 5, averaging 7,298.39 BRL/ton on Thursday, August 5.


The Brazilian exports of soybean in July were the lowest since March/21, totaling 8.66 million tons, 21.78% less than that shipped in June and 13% down from that in July/20. China, the major destination for the Brazilian soybean, reduced imports from Brazil by 18% between June and July – this year, China has reduced purchases from Brazil by 22.6%. Besides, the Brazilian exports of soybean to the Netherlands decreased by 33.72% between June and July and by 62.6% between July/20 and July/21, according to data from Secex.




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