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Brazil’s Soybean Exports Seen Surging Even Higher

CONAB study shows more demand for Brazil’s oilseed.

SAO PAULO, Brazil-- Brazilian exports of soybeans are surprising the market during this harvest. According to a study by National Supply Company (Conab), Brazil exported around 44 million tons of grain from January to June 2017, a record volume for the period. “In the second half of 2017, Brazilian exports should remain heated. In this way, exports to 2017 are estimated at 63 million tons, 22% higher than the total exported in 2016,” Conab said in a study released September 6.
Conab said in the study that Brazilian soybean exports could grow even more if there were weather problems in the U.S. If this occurs, Brazil can continue with high exports after the American harvest, from September to December 2017, before the end of the Brazilian exports year calendar.

High stocks

Conab estimates that soybean stocks in the 2016-17 harvest will reach 5.42 million tonnes. “This number is considered to be the largest stock value in the last 12 years. The increase in national crushing and exports wasn't enough to give outflow of a record of more than 113 million tons,” Conab said.

Low prices

Despite the increase in soybean exports, the scenario isn’t so favorable to the farmer. Prices in the Brazilian grain soybean market are influenced by several factors, such as freight prices, taxes, and administrative expenses.
However, according to Conab, the factors that most affect national prices are the variations of the dollar and international prices. According to Conab, although international soybean prices between January and June 2017 are 1.75% higher than in the same period of 2017, the situation for the Brazilian is different. Between January and July 2017, prices in the Brazilian market had a reduction of approximately 15.91% in relation to the same period of 2016.

Cost of production drops

With the strong influence of the dollar, the cost of production of Brazilian soybeans also fell. According to Conab’s study, the variable production cost in May 2017 was 3.01% lower than in the same period in 2016. “The main reason for this decrease was the dollar, which in May 2016 was quoted in average to R$ 3.53 and in May 2017, to R$ 3.20,” says Conab.

Profitability for the producer

According to Conab’s overall assessment for the 2016-2017 soybean crop, the average cost-variable profitability is 45.88% lower for the farmer. “However, soybeans continue to be the most profitable and liquid product on the market. Thus, for the 2017-18 crop, Brazilian farmers are expected to increase the soybean area in the major producing states,” Conab said in the study.

New Planting Season Starts

Brazilian producers are already preparing to start planting the 2017-2018 soybean crop. In the main producing regions, such as in the state of Mato Grosso, the “vazio sanitário,” a phytosanitary measure to control Asian rust disease in the plantations, will end soon. With this, producers are authorized to start planting soybeans in Mato Grosso as of September 15.
Brazilians are aware that the main factors that must influence international soybean prices before the beginning of the plantation are the excess supply of soy in the market and the climate in the United States.
The current scenario for Brazilian soybeans is lower production costs and lower prices. Conab’s projection is that Brazilian soybean production will decline from 113.93 million tons of soybeans in the 2016-2017 harvest to 107 million tons in the 2017-2018 harvest. Exports are expected to register small growth in the next crop. “Even with an increase in Chinese imports, Brazilian exports should not increase significantly and should increase from 63 million tonnes to 64 million tonnes,” Conab said in the study.

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