Brazil soymeal premium hits high on robust demand, tight supply

Basis premiums over CBOT futures for Brazilian soymeal have jumped sharply in the second week of September, and to the highest level since Agricensus records began, buoyed by robust demand as a lack of Argentine soymeal availability in the export market continues.

Brazilian soymeal basis premiums have surged to $42/st above soymeal futures on CBOT on September 10, the highest premium since Agricensus' started collating prices for the contracts in 2017, and have resulted in flat prices to reach $422/mt, the highest since mid-August.

The recent strength in prices has resulted in flat prices for meal in Brazil – the second largest exporter globally – to remain 11% above the levels registered a year ago on tight soybean supply from Latin America.

“Some processing plants [in Brazil] have become next soymeal exporters for the first time ever, ever since Argentine soymeal started have problems in sourcing the international market,” Victor Martins from Hedgepoint Global Markets told Agricensus.

But soymeal exports from Brazil have been mostly lower so far this year when compared with a year ago, mainly due to less soybean available for crushers as export demand for soybeans has been robust this year, while farmers have been holding back soybean sales waiting for prices to rise.

“It has been very difficult to buy soybeans this year, and this is impacting in the availability of soybean products [oil and meal] domestically,” a local trade source told Agricensus. 

Tight meal availability for the export market, coupled with the lower availability in Argentina, has also supported the premiums for soymeal.

Brazil’s grain exporters association Anec expects 1.4 million mt of soymeal to be exported in September, up 8% from last year’s shipments in the equivalent month.

Total soymeal shipments in the first eight months of the year have totalled 12.7 million mt, 3% down from the 13.06 million mt exported on the same time last year.

The USDA has estimated Brazilian soymeal exports at 17 million mt in 2021/22, 200,000 mt lower than the previous season, and below the 17.5 million mt from 2019/20.