• +923 343206 986
  • Contact@btrams.com
  • Pakistan

Record Brazilian soya crop can creates pressure

Record Brazilian soybean supply set to pressure competition

The Brazilian soybean sector is forecast to produce record-breaking volume in crop year 2021-22 (September-August), likely pressuring major rivals the US and Argentina.

The National Supply Company, or Conab, and the US Department of Agriculture expect Brazil’s soybean production at 142.8 million mt and 144 million mt, respectively, in 2021-22, compared with a record 138 million mt in 2020-21. Platts Analytics also expects an all-time high-volume range of 142-144 million mt, as long as rains are ample until late-January.

Brazilian soybean farmers have lapped up huge profits over the past two years, due to high oilseed prices, weak real and robust demand from China, Conab said. Farmers are bullish about 2021-22 soybean planting, with high acreage transferred from other crops, it said.

“Even with record 2021-22 harvest forecast, soybean prices show an upward trend, as several countries resort to stock hoardings amid heating demand for animal feed,” Conab told S&P Global Platts. “As a result, the soybean acreage in Brazil is forecast to expand 3.7% year on year to an all-time high 40.35 million hectares in 2021-22.”

The US and Argentina are likely to feel the heat in 2022 if Brazil’s output meets current-year expectations, as the three countries compete for exports to China — the world’s biggest beans importer.

Brazil’s soybean production has soared 91% between 2011 and 2021, according to the USDA, while the US output increased 32% over the last ten years to 120 million mt. Argentinian beans output declined by 1% to 49.5 million mt during the same period, as local farmers switched to corn and wheat to avoid high taxes on the oilseed.

Brazil has emerged as the top soybean supplier to China, accounting for a roughly 55% share, while the US has slipped to the second spot with a 30% share.

There is high likelihood of an earlier-than-normal harvest of Brazilian soybean crop with timely 2021-22 planting that is not favorable for the US beans exports early-2022, according to market sources.

“Brazil’s new soybean crop is likely to flood the international markets as early as mid-January, which could slacken the US oilseed exports significantly,” Terry Reilly, senior commodity analyst with agricultural commodities trading group Futures International, said.

Weak currency supports exports
Brazil is forecast to export an unprecedented 93 million mt of the oilseed in 2021-22 on the back of robust Chinese soybean demand, Platts Analytics said. The USDA and Conab project Brazilian shipments at 94 million mt and 90.7 million mt, respectively, during the same period.

Leave a Reply

Your email address will not be published. Required fields are marked *

en English