Brazil Solidifying its Status as No. 1 Soy Supplier to China: Report

The US is going to have to get used to playing second fiddle to Brazil in terms of soybean exports to No. 1 buyer China, according to a new report from the USDA attaché.

Released in late December, the report noted that almost three-quarters - or about 61 million tonnes - of total Brazilian soybean shipments for the 2019-20 season were destinated to China. And although exports to China were down sharply in November, the report described that dip as an anomaly, simply because Brazil had basically sold out of old-crop soybeans.

In fact, Brazil ‘solidified its status as the main soybean supplier to China, with outstanding export performance in the first eight months of the marketing year,” the report said.

“As the data shows, Brazil’s ports delivered in a big way, shipping unprecedented volumes on the monthly basis, which helped to cement its trade relationship with Chinese buyers.”

The report pegged total Brazilian soybean exports to all destinations for 2019-20 at 81.7 million tonnes, down 300,000 from the attaché’s previous estimate, mainly due to a blistering pace of shipments that left the country with little to sell ahead of the 2020-21 harvest, which typically starts in earnest in late January and into February.

Looking ahead, the attaché is expecting even bigger things for the 2020-21 season. Brazilian soy exports are projected at 85 million tonnes, easily topping the previous record set in 2017-18 at 83.7 million tonnes. The forecast is based on expectations of available supplies and an extremely favourable exchange rate, the report said. It is also assumed. that global soybean demand will not see a severe downturn from the second wave of the coronavirus pandemic.

“Unlike a multitude of other sectors, soybean consumption has limited elasticity, the report said. “In the key soybean importing countries of China and Europe, despite the economic slowdown, meat consumption is not likely to suffer a dramatic downturn.

The report left the earlier attaché estimate of 2020-21 Brazilian soy production unchanged at 131.5 million tonnes (versus the official USDA estimate of 133 million). Although it acknowledged the potential negative impact of current dry weather in parts of the country, the report said it was still too early to reassess yield potential.

US soybean exports to China fell off badly during the trade war but have bounced back in 2019-20. As of early December, China’s had purchased nearly 30 million tonnes of US soybeans, the highest since 1991 and 57% of America’s total export sales.

Source: DePutter Publishing Ltd.

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