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No hang-ups for Brazilian soybean exports

Zoom in font  Zoom out font Published: 2016-05-20  Views: 23
Core Tip: Brazil’s soybean export season is off to a stellar start, and there are no signs of a slowdown anytime soon. Brazil, the world’s No. 1 soybean exporter, tallied record monthly volume in April, totaling 10.1 million metric tons. That figure was up 20 pe
Brazil’s soybean export season is off to a stellar start, and there are no signs of a slowdown anytime soon.

Brazil, the world’s No. 1 soybean exporter, tallied record monthly volume in April, totaling 10.1 million metric tons. That figure was up 20 percent from March and more than 50 percent from one year ago.

Brazil has had good luck with its soybean harvest in recent years, padding the availability for export. But the increased appetite from the world’s leading soybean importer, China, has been particularly influential in the soybean export boom.

Logistical issues appear to have eased somewhat over previous years, meaning that together with the conclusion of yet another huge soybean harvest, Brazil is well on its way to exporting a record soybean volume this year.

PORT STATUS

Brazil’s ports are notorious for backups and inefficient logistics. But bulkers waiting to load are doing so for the shortest time in at least four years at the country’s two primary soybean ports, Santos and Paranagua. This is true even despite the record exports over the last few months, particularly with corn (http://reut.rs/22fwrt1).

Although Santos and Paranagua have historically dominated in terms of Brazil’s shipping volume, other southern ports have become increasingly popular for grains. In 2004, Rio Grande and Sao Francisco do Sul together accounted for 18 percent of Brazil’s soybean shipments, but by 2014 they accounted for 28 percent.

These four ports together account for nearly three-quarters of Brazil’s soybean exports, but it is the smaller ports that may start running into issues as volumes increase. Wait times have been drastically higher this year than in the past, meaning that if Brazil wants to continue to increase exports at the current pace, it may have to consider making some improvements to infrastructure to facilitate higher volumes at smaller ports.

COMPETITION AND TARGETS

The United States’ soybean export campaign does not typically interfere with Brazil’s season as the South American country begins to ship large soybean volumes in March, just as the U.S. season is winding down. But major price disparities, crop shortages, and particularly a boost in international demand can lead to increased competition.

Throughout the main part of the current U.S. shipping season, the delivery price of U.S. soybeans to China has been higher than that of Paranagua to China. But since the Brazilian season ramped up in March, U.S. soybeans have turned slightly cheaper (http://reut.rs/1V87kY0).

However, because the price difference is relatively small, it is unlikely to boost demand for U.S. soybeans. Brazil’s oilseed tends to have the advantage anyway since the protein content and quality are higher than the U.S. product, so buyers often steer south of the equator for their soybeans if it makes economical sense.

And China’s demand is only expected to grow. The U.S. Department of Agriculture expects next year’s Chinese soybean demand to increase by 4 million metric tons over this year. So Brazil will have plenty of help in offloading its supply in the coming year.

Brazil is on pace to meet this season’s export target of 55.4 million metric tons of soybeans set by its Trade Ministry. Between February and April, the first three months of Brazil’s local marketing year, the country has shipped more than 20 million metric tons of soybeans, well above last year’s 13 million metric tons.

Another 9 million metric tons of soybeans are expected to be shipped this month. If this pace is sustained, the Trade Ministry’s target will be met by mid-August, toward the tail end of prime soybean exporting season. Based on the recent pace, the Trade Ministry may need to increase its forecast or it runs the risk of being outperformed by reality.
- See more at: http://ingredientnews.com/articles/no-hang-ups-for-brazilian-soybean-exports/#sthash.ePhKnJbe.dpuf
 
 
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