Ten Brazilian soybean crush plants now offline as crush margins plummet

Up to ten Brazilian soybean crushers have reportedly halted processing operations due to plunging crush margins and continued weak demand, reducing the country's crushing pace by 15,000 mt/day, local sources have told Agricensus.

Two more plants have now gone offline, taking the total amount of affected facilities to ten, reducing crushing pace by 15,000 mt/day collectively represent about 8% of the country’s capacity.

Agricensus previously reported that eight soybean crush facilities were offline on September 12.

Soybean processing capacity in Brazil is estimated at 194,400 mt/day, with most of the operations focused on the regions of Mato Grosso, Parana, Rio Grande do Sul and Goias, which account for nearly 70% of the country's total capacity.

Brazilian crush margins for the rest of the year have plummeted into deeper negative territory over the past two weeks, with calculated margins for Q4 ranging at minus $56-$50/mt per month, according to data from Brazil’s Agrinvest Commodities.

“Crushing margins are really bad again,” Victor Martins, senior risk manager at HedgePoint Global, told Agricensus.

“But some plants will continue to operate as they are better off crushing with negative margins than having the beans as stock, in order to fulfill its deliveries - especially to importers,” Martins added.

Crushing plants usually undertake maintenance around December/January, ahead of the soybean harvest in Brazil, but this year plants are going offline earlier than anticipated.

“There is not much liquidity in Brazil – a lot of the paper trades done on FOB Paranagua are crushers buying back hedges to sell to the domestic market (biodiesel fixings) – the biodiesel market has not been very active of late so little demand from that too,” a local trade source told Agricensus.

Brazil is the second largest exporter of soyoil globally, behind Argentina, and it is poised to export 2.13 million mt of soyoil and 18.8 million mt of soymeal in 2022/23, according to data from the US Department of Agriculture (USDA).