Weak Real to Boost Brazil's Soybean Exports in 2016

Brazil's exchange rate is having a significant impact on domestic and global soybean production and trade. Since early October 2014, the value of the real has declined 37 percent relative to the dollar. The current exchange rate, at roughly 4 reals per dollar, means that Brazilian producers are operating under a different set of price signals than their counterparts in the United States. While U.S. producers have seen the dollar value of soybeans decline 8 percent since last October, Brazilian producers have seen the price in reals rise to near record levels, equivalent to the nearly $15/bu U.S. producers experienced in May 2014.

The strong soybean price in reals has allowed Brazilian exporters to be more flexible on prices. In addition, this attractive price will encourage further acreage expansion and increased soybean production. In 2016, Brazil's production is forecast to grow nearly 4 million tons over the previous year, while exports are forecast to expand by a similar amount. With limited import growth expected for China, these sales are expected to occur at the expense of U.S. suppliers. U.S. exports are currently forecast at 45.6 million tons in 2015/16, down 4.6 million tons from last season.

OVERVIEW

2015/16

Global soybean production is raised this month as a larger forecast for Brazil more than compensates for reductions in India and Ukraine. U.S. production is down as lower area is partly offset by a higher yield. Trade is raised this month due to an increase in Brazil's exportable supplies, more than, offsetting reductions in exports by the United States and Ukraine. Global exports remain at a record level. Global stocks are raised, reflecting a larger production and carry-over from last year. The U.S. season-average farm price is unchanged.

2014/15

Global soybean production is raised this month as larger estimates for Brazil and South Africa more than offset reductions for the United States, Paraguay, and India. Exports are raised on larger shipments from Brazil. Ending stocks are reduced in response to growing consumption and trade.

SOYBEAN PRICES

U.S. export bids, FOB Gulf, in August averaged $360/ton, down $14 from last month, reflecting ample supplies amid the onset of the harvest.

As of the week ending October 1, U.S. 2015/16 soybean commitments (outstanding sales plus accumulated exports) to China totaled 9.2 million tons compared to 17.2 million a year ago. Total commitments to the world are 21.9 million tons, compared to 29.7 million for the same period last year.

2015/16 TRADE OUTLOOK

  • United States soybean exports are reduced 1.4 million tons to 45.6 million in response to Brazil's increased supplies and strong competition.
  • Brazil soybean exports are raised 2.0 million tons to 56.5 million reflecting an increase in exportable supplies and growing competitiveness resulting from a devalued real.
  • Canada rapeseed exports are up 400,000 tons to 7.8 million reflecting a larger production forecast and expected increase in sales to China.
  • China rapeseed imports are up 600,000 tons to 3.9 million on greater availability and a lower cottonseed use forecast.
  • Egypt soybean imports are raised 100,000 tons to 2.1 million reflecting growing protein meal demand and expanding crush capacity.
  • European Union
    • Soybean imports are up 100,000 tons to 13.6 million reflecting growing demand for protein meal.
    • Sunflowerseed oil imports are raised 100,000 tons to 1.0 million on strong demand for soft oils and larger exportable supplies forecast for Ukraine.
  • India soybean meal exports are down 325,000 tons to 1.7 million on tighter supplies, strong domestic use, and high prices relative to other exporters.
  • Indonesia palm oil exports are raised 200,000 tons to 25.0 million on moderate year-to-year growth in exports.
  • Pakistan soybean meal imports are raised 100,000 tons to 1.0 million on continuing strong demand for protein meal, despite import tariffs.
  • Philippines soybean meal imports are down 250,000 tons to 2.4 million reflecting a slower rate of protein meal growth.
  • Russia soybean imports are raised 100,000 tons to 2.0 million on strong domestic demand for protein meal.
  • Thailand soybean imports are up 150,000 tons to 2.3 million on additional demand from the feed industry.
  • Turkey soybean imports are up 200,000 tons to 2.3 million reflecting growing domestic requirements for protein meal.
  • Ukraine
    • Sunflowerseed meal and oil exports grow 300,000 tons to 4.0 million each on larger exportable supplies due to an increase in forecast domestic crush.
    • Soybean exports are down 350,000 tons to 2.0 million reflecting a smaller production forecast.

2014/15 TRADE CHANGES – based on trade data

  • United States
    • Soybean exports are increased 229,000 tons to a record 50.2 million on final trade data.
    • Soybean meal exports are raised 136,000 tons to a record 12.0 million tons on strong yearto-date trade.
  • Argentina soybean meal exports are down 500,000 tons to 28.0 million on slower end-of-year trade volume.
  • Brazil
    • Soybean exports are up 1.1 million tons to 51.1 million on final trade data.
    • Soybean meal exports are reduced 310,000 tons to 14.4 million on final trade data.
  • China palm oil imports are up 100,000 tons to 5.6 million.
  • Egypt soybean imports are boosted 100,000 tons to 2.0 million.
  • European Union
    • Soybean imports are raised 100,000 tons to 13.6 million.
    • Soybean meal imports are up 100,000 tons to 19.7 million.
    • Sunflowerseed meal imports are down 100,000 tons to 3.3 million.
    • Soybean oil exports are up 100,000 tons to 1.0 million.
  • Indonesia
    • Palm oil exports are up 500,000 tons to 24.5 million.
    • Palm kernel meal exports are reduced 100,000 tons to 3.8 million.
  • Malaysia
    • Palm oil imports are up 150,000 tons to 950,000.
    • Palm kernel meal exports are raised 100,000 tons to 2.5 million.
  • Pakistan
    • Soybean meal imports are up 100,000 tons to 1.0 million.
    • Rapeseed imports are down 100,000 tons to 925,000.
  • Paraguay soybean exports are reduced 225,000 tons to 4.4 million.
  • Philippines soybean meal imports are down 300,000 tons to 2.2 million.
  • Russia sunflowerseed meal exports are reduced 100,000 tons to 1.4 million.
  • Thailand soybean imports are up 150,000 tons to 2.2 million.
  • Ukraine sunflowerseed meal exports are down 200,000 tons to 3.6 million.