MercoPress. South Atlantic News Agency

Brazil's 2018/19 soy exports forecasted to decline : smaller crop and domestic prices higher

Conab attributed the decline to reduced Chinese soybean imports, a lower harvest projection of 115 million tons, and rising domestic demand for biodiesel use.

Brazil’s soybean exports are expected to come in 14-18% down on the year in 2019 due to lower production and reduced buying by China, industry reports showed.

 The country, which is one of the world’s top soybean exporter, is projected to export 71.5 million tons in 2019, down 14.5% from 83.6 million in the previous year, according to the Brazilian agricultural agency Companhia Nacional de Abastecimento, Conab.

Conab attributed the decline to reduced Chinese soybean imports, a decreased harvest projection of 115 million tons in harvest year 2018-19 (September-August) — 4 million tons lower than 2017-18 levels — and rising domestic demand for biodiesel use.

“In the current scenario, it is considered that exports of soybeans in 2019 should vary according to the prices of bran and oil in the international market. The tendency is that the values of these two commodities are more attractive domestically than their export prices. However, the scenario can change, depending on the freight rates and the value of the dollar against real.

Another important factor impacting export prices is the possible resolution of the trade war between the United States and China,” Conab said in its report.

“Record soybean exports in 2018, coupled with a reduction in the 2018-19 harvest, will significantly reduce Brazil’s exportable supplies in the coming year,” the US Department of Agriculture said in its February 2019 report.

With local year (February-January) crush forecast set to remain near the 2017-18 level, and with some necessary rebuilding of stocks, local year exports are forecast down 14.0 million to 70.0 million tons USDA said.

International commodities consultancy INTL FCStone also indicated a drop.

Brazil’s soybean exports are expected to fall 18.6% year on year to 68 million tons in 2019, from 83.6 million tons in 2018, it said, citing the dry weather spell.

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“We had weather issues during the development of the soybean crop this year and we are estimating a production of 112.2 million tons (this number can still be adjusted). Because of that and the very low beginning stocks, Brazil should export less this year,” FCStone said.

Though projections for 2019 are weak, strong export growth was seen in January.

Brazil’s soybean exports rose 37% year on year to 2.154 million tons in January 2019, according to Brazilian Association of Vegetable Oils report, released in February 2019.

“Brazilian soybean exports started the year 2019 more intensely due to the early harvest that began in December 2018, due to the early planting by some producers using early-cycle seeds. Added to this is the use of the 2017-2018 (Initial Stock) crop inventory in January 2019 exports, which obviously increased the exported volume,” Conab said.