Brazil soybean exports to fall by up to 10% in 2020

Brazil's grain exporters association Anec expects the country to export 10% fewer soybeans this marketing year due to the effects of the coronavirus pandemic, while corn exports could be at risk of excess supply from the North American crop.

Soybean exports are now forecast at 72 million mt, down from 80 million mt forecast prior to the isolation measures imposed to contain the spread of Covid-19 in mid-March, the director general of Anec, Sergio Mendes, said on a webcast hosted by agricultural analysts Datagro.

“Under the best of conditions, we might reach 74 million tons, but we revised our view to 72-73 million,” Mendes said.

Brazil’s biggest exporters of soybeans are its main grain crushers -- international companies such as ADM, Bunge, Cargill and Louis Dreyfus, along with a couple of local industry players Caramaru and Amaggi and international trading houses such as Olam.

The head of Brazil’s grain crushers industry association Abiove, Andre Nassar, said the industry has pulled back from the physical soybean market amid the crisis and was no longer offering credit to producers for the forward delivery of soybeans this crop as they take a “risk-off” strategy until demand recovers.

The industry is responsible for supply of about 70% of the vegetable oil for Brazil’s annual 6.5-billion-litre biodiesel output and demand for fuels in Brazil has dropped sharply after the government imposed social isolation measures against Covid-19, Nassar said.

Crushers have struggled in some areas as well because of restrictions on public transport on the municipal levels that have left some plants understaffed.

Nassar said Abiove secured the help of the courts and the federal government to clear these bottlenecks.

The lower export figure comes despite Brazil expected to ship 16 million mt of soybeans this month, a huge month that compares with the previous record of just 12 million mt.

Anec is projecting Brazilian corn exports at 31-32 million mt this year, but Mendes warned that complications from the collapse in oil prices and excess corn in the US could force this projection lower.

“The US is looking at 30 million mt of surplus corn which could derail Brazilian exports,” Mendes said, but added that currently “producers were highly incentivized to export because of the exchange rate.”

Brazil’s real has depreciated more than many emerging market currencies against the dollar since the start of the year.

The real is 36% weaker against the dollar compared to the start of 2020, at 5.50:$1, which gives Brazilian commodities exports a strong pricing edge on the international market.