In the heart of Latin America, Brazil’s Federal Agricultural Agency, Conav, has unfurled a tale of soybean abundance in its latest monthly report. The numbers dance to the rhythm of record-breaking harvests, with soybean production projected to scale new heights, cresting at a staggering 154.6 million tonnes during the 2022-23 marketing season. This bullish harvest surpasses the previous year’s yield of 125.5 million tonnes, painting a promising picture on the horizon. Harvesting commenced well before the mid-May curtain call, a departure from the traditional timeline that ushers in the New Year, typically from January to mid-May.
Conab’s report tells a compelling story of soybean exports riding the wave of domestic plenty. As the soybean fields flourish, Brazil’s total exports are set to soar from 78.7 million tonnes in the 2021-22 season to a zenith of 969 lakh tonnes in the ongoing 2022-23 season. The crushing of soybeans in domestic plants is anticipated to rise from 47.7 million tonnes to 52.8 million tonnes. With this surge, soybean oil and soy meal production will naturally follow suit, creating a melodious symphony of export and domestic consumption growth.
However, amidst the festivities of abundance, there is a sobering note. The projected surplus stock of soybeans at the close of the 2022-23 marketing season in Brazil is estimated at 5.8 million tonnes. This surpasses the previous year’s reserve of 4.7 million tonnes by 1.1 million tonnes, a sobering reminder that even a surplus can create challenges. Simultaneously, Brazil’s soybean market faces a confluence of factors. Record production has led to abundant supply, but domestic demand has dipped due to diminishing crushing margins. Consequently, Brazilian exporters are entering soybean contracts with China for December deliveries, diversifying their market presence.
Remarkably, Brazilian producers, with ample soybean stocks in hand, are offering December rates nearly equivalent to the prevalent prices at the U.S. Gulf Coast ports. This move may present a stumbling block for soybean exports from the United States to China. These developments unfold as China seeks to solidify substantial soybean purchases, especially from the U.S. Commentators speculate that U.S. soybean exports might sprint off to an early start but could decelerate significantly in the latter months. Meanwhile, the soybean sowing season in Brazil is poised to commence in mid-September. Producers, sensing opportunity, may be inclined to hasten stock liquidation while Brazilian ports grapple with a surfeit of corn exporters.