By Danielle Sequeira, AgRural
The last time I wrote here was in late March. Brazil was harvesting its 2019/20 soybean crop amid all the uncertainty brought by the COVID-19, which had already made a lot of people (including myself) start working from home by then. Eight months later, I am back in the office, but things are not exactly normal yet. Who could tell, above all things, that Brazil would be importing soybeans from the US?
Despite all the problems caused by the pandemic, including, unfortunately, 166 thousand people dead so far (0.079% of the Brazilian population, very close to the rate seen in the US), Brazil was able to export very quickly in the first half of 2020.
Spurred by the strong demand from China and a weaker currency (a direct result of the risk aversion brought by the pandemic and of domestic problems caused by the political polarization that only got worse with the new virus), Brazil shipped 68.8 million metric tons of soybeans in the first six months of 2020, compared to 51.2 million in the same period last year (+34%).
Not a new record, but almost there
The export pace has slowed down now in the second half of the year, as expected. Nevertheless, by Oct 31 Brazil had shipped 81.4 million metric tons, 24% up from the same period in 2019. But the record seen in Jan-Dec 2018 (83.4 million metric tons) is not likely to be beaten, because Brazil has run out of soybeans and now is importing – first from Paraguay and Uruguay, neighbors and partners in the Mercosur trade bloc, now from the US, after the Brazilian government suspended an 8% import tariff until Jan 15, 2021.
How much is Brazil going to import from the US?
Although Brazilian cash prices have skyrocketed, practically doubling in the course of the year, bringing soybeans from the US is not exactly cheap, even after the import tariff waiver, because the Brazilian real is still too strong.
In the ten first months of the year, Brazil imported 626 thousand metric tons, most of that (589 thousand) from Paraguay, which is a frequent source of soybeans for poultry and swine producing areas in southern Brazil.
But Paraguay harvests its soybean crop in the first quarter of the year and, by now, the country doesn’t have much to export. Since Argentina – another obvious source – is not exporting much either, the US will probably be the main origin for about 300 thousand metric tons of soybeans that Brazil is likely to import in the fourth quarter of 2020, with possibly a few amounts also in the first two weeks of 2021, in order to meet its domestic market demand.
And what about the 2020/21 soybean crop, which is being planted? Well, that is complicated. Spring rains, which are decisive for the beginning of the planting season in Brazil, where winter is extremely dry, have arrived later than normal and been very spotty. That caused a historical planting delay in several states.
Farmers have already caught up, planting at full steam from mid-October on, even where moisture wasn’t exactly good. The damage, however, is done. Not to yields so far, since planting later than normal is even beneficial sometimes. The problem is that the delay seen from mid-September to mid-October will result in fewer acres harvested in January, in a year that will have virtually zero beginning stocks.
That means that Brazil will not be able to export soybeans in January, leaving the US as the world’s main origin for a whole month more. Also, there are concerns about La Niña, which might result in yield losses down the road, especially in southern Brazil, since the phenomenon sometimes causes spells of hot, dry weather during the pod filling stage. But that is something to be addressed next month.