Brazil’s Slow Soybean Harvest Widens US Export Window
Harvesting delays in Brazil, the world’s top soybean producer, are prompting buyers led by China to rely on rival exporter the United States for longer than usual in 2021, according to government data and traders.
Sustained demand for U.S. soybeans is accelerating an historic drawdown of U.S. supplies of the oilseed and could further drive up soybean prices at a time of rising food inflation as countries hoard staples during the pandemic.
Concerns over tight global soybean supplies after China dramatically increased purchases in recent months ignited a 4.5% U.S. soybean futures rally last month to a 6-1/2-year high.
Brazil usually harvests its soybeans in the first three months of the year, marking an end to the dominance of U.S. exports. However, that process has been delayed by a drought last year that slowed plantings, and rainfall at harvest time.
The country’s shipments of soybeans in January were 28 times lower than a year before at 49,500 tonnes, an amount insufficient to fill up a single vessel, Brazilian trade data showed.
In contrast, the United States, its biggest rival in global markets, inspected some 8.9 million tonnes for shipment in the month, the highest on record, according to United States Department of Agriculture (USDA) data.
Anec, a Brazilian group representing grain exporters like Cargill and Bunge, confirmed current shortages in Brazil may give competitors an edge.
“We assume this is happening,” Anec director Sergio Mendes said by telephone, adding Brazil’s low soy availability is elongating the U.S. export window.
In February Brazilian soy shipments could be as little as 6 million tonnes, down from 8.5 million tonnes initially expected, Anec has said.
Brazil’s supplies are only expected to normalize by March, one large trader told Reuters.
That could spell chaos at Brazilian ports, as by March and April soybeans will be competing with sugar for finite loading capacity.
Speaking on condition of anonymity, the trader said it is tapping grain suppliers in the United States and Argentina. Much of the burden will fall on the United States, as Argentina’s soy harvest does not start until March.
Importing countries, particularly China, have been boosting purchases of grains and oilseeds during the pandemic to guard against shipping disruptions or further price increases in agricultural commodities.
China buys grains and oilseeds from South and North America to make livestock feed. It is currently rebuilding its hog herd after a deadly pig disease killed millions of animals.
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