<img height="1" width="1" style="display:none;" src="https://www.facebook.com/tr?id=567935313412446&ev=PageView&noscript=1"/>

Share of Brazil’s Soybean Exports to China Spikes in August

The share of Brazil’s exports destined for China rose to 85 percent in August, 7 percentage points above the previous month. This increase is due to a turn to Brazilian sources by China following the implementation of duties on U.S. soybeans. This has resulted in higher prices for Brazilian soybeans that discouraged purchases by importers other than China. This trend seems likely to continue and may strengthen in the coming months. At the current level of export share, Brazil’s exports of soybeans to China would reach nearly 60 million tons (year ending January) compared to 54.4 million the previous year, accounting for all of the additional soybeans Brazil harvested in 2018.

Using these projected trade flows and current import forecasts, U.S. trade opportunities for markets outside of China would rise nearly 13 million tons in the coming year compared to 2016/17. In contrast, increased purchases of Brazilian soybeans by China would result in an 8-million-ton decline in potential U.S. and other exporter trade to China for the same period. Any reduction in China’s demand in the coming year will likely be absorbed by the United States because of the duties. Conversely, an increase in China’s share of Brazil’s exports would reduce Brazil’s sales to other markets and increase opportunities for the United States to ship to these other markets, offsetting reduced sales to China.

OVERVIEW FOR 2018/19

Global oilseed production is forecast higher this month at 604.7 million tons. Soybeans are forecast up at 369.3 million tons with gains for the United States and China exceeding losses in Canada, India, and Uruguay. The rapeseed crop estimate is lower this month on reductions for China and the European Union. Peanut production forecast is down this month for China, India, and the United States. Cottonseed is up for China, Brazil, and the United States which more than offsets a reduction for Australia. Global soybean imports are down, driven by weaker demand from China. Soybean exports are down on projected lower exports for Canada and Uruguay. The U.S. season-average farm price for soybeans is projected down $0.30 to $8.60 per bushel.

OVERVIEW FOR 2017/18

Global oilseed production is estimated at 573.6 million tons. Larger soybean production for Argentina is offset by cuts in Canada and Uruguay. Global soybean imports are down on lower shipments to China and Thailand more than offsetting gains for Egypt, the European Union, Iran, and Pakistan. Exports are slightly down for Argentina, Canada, and Uruguay which exceed gains for Brazil and the United States. The U.S. season-average farm price for soybeans is unchanged at $9.35 per bushel.

SOYBEAN AND SOYBEAN MEAL EXPORT PRICES

U.S. soybean export bids in August, FOB Gulf, averaged $336/ton, up $1 from July. In comparison, Brazil FOB Paranagua averaged $394/ton, up $2 from last month. Argentina FOB Up River averaged $384/ton, up $4 from last month. In the first half of August, prices in the United States saw some upward mobility supported by higher year-over-year exports and crush. However, in the second half of August, prices came under pressure as private crop estimates pointed to a bumper soybean harvest.

U.S. soybean meal export bids in August, FOB Gulf, averaged $385/ton, down $4 from July. In comparison, Brazil FOB Paranagua averaged $361/ton, down $16/ton from last month. Argentina FOB Up River averaged $354/ton, down $22. Many countries, except China, raised their soybean imports and crush above expectations to offset shortfalls in Argentina’s soybean meal exports. Price declines in the United States were not as significant as in Brazil and Argentina, primarily due to strong exports and domestic demand for protein feed.

SOYBEAN AND PALM OIL EXPORT PRICES

Higher year-over-year global production of both soy and palm oil has put downward pressure on prices of both oils. Compared to September 2017, soy oil export prices are down $149 in the United States, $134 in Brazil, and $132 in Argentina. In August 2018, U.S. soy oil export prices have run higher than South American origins with U.S. Gulf averaging $673/ton, Brazil $657/ton, and Argentina $641/ton. India has reduced palm and soybean oil imports on higher tariffs and a falling rupee. In this environment of reduced palm oil demand, the combined effects of higher Indonesian production and resulting stocks, versus moderated Malaysian production, have led to a divergence in Indonesian and Malaysian palm oil export prices. In August, Malaysian palm oil prices ran $21/ton higher than Indonesian palm oil.

EXPORT SALES

For the week ending August 30, U.S. 2017/18 soybean export commitments (outstanding sales plus accumulated exports) to China totaled 27.9 million tons compared to 36.7 million a year ago. Total commitments to the world are 58.9 million tons, compared to 60.5 million for the same period last year.

Black Sea Trade Flows (BST Flows)

FeedDinner 2019