W13: Weekly Soybean Update
Brazil
Brazil’s Soy Harvest Reaches 70% Of Total Area, Says AgRural (Mar 27)
The harvest of Brazil's 2022/23 soybean crop had reached 70% of the cultivated area on Mar 23, against 62% a week earlier and 75% in the same period last year, AgRural highlighted. According to the consultancy, the works are practically finished in Mato Grosso and Rondônia and entering the final stretch in Goiás, Mato Grosso do Sul, Tocantins, and São Paulo. “The focus now is on productivity reports from later states, which may give more clues about the final size of Brazilian production, whose estimates should undergo fine adjustments between now and May”, he added. AgRural also reported on Mar 27 a reduction of 600K MT in the estimate for the soybean crop in Brazil, to 150.3M MT.
Soy Continues to Fall in the Brazilian Market, Until When? (Mar 27)
Soybean prices continue to fall in the Brazilian market. Pressure came from supply over demand. The pace of soybean sales has been reduced in recent months, and now producers need to stock up and/or free up space in warehouses, increasing availability in the national spot. According to data from Cepea's newsletter, on the buyer's side, applicants are cautious about purchasing new batches of soy. As for derivatives, the devaluations of oil and bran have been less intense concerning those verified for the raw material, resulting in an improvement in the margin of industries. In the case of soybean oil, the downward movement was limited by expectations of greater demand for biodiesel production.
Soybean Exports Yield USD 169B in Three Years (Mar 27)
Exports of soy and derivatives have been increasing YoY and should reach USD 66.4B in 2023. If confirmed, the value will be 89% higher than in 2020. From 2021 to 2023, exports of soybeans and derivatives could add USD 169.4B. Record national production, Chinese demand, crop failure in competing countries, prices still at high levels, and the increase in the blend of biodiesel with diesel cooperate for this record that the sector should reach. The data from Abiove (Brazilian Association of Vegetable Oil Industries), predicts more robust numbers for this year than in the previous one. This scenario of good exports guarantees an income for producers. The Gross Value of Production with soy will be USD 76.29B (R$ 387B) this year within the gate, according to the Ministry of Agriculture. In February, Brazilians exported a ton of soybeans, including premiums, for USD 565 via the port of Paranaguá (PR). It is a value lower than last year, but still at a high level. Production, which had a break in 2022 due to droughts, rises to a record 153.6M MT this year. This increases the potential for internal processing and export of soy and its derivatives.
How the Brazilian Soybean Markets Behaved (Mar 27)
In W12, soybeans experienced a worsening logistical situation in Brazil; with China buying US soybeans and rising US interest rates. As a result, the contract expiring in May/23 ended the week quoted at USD 14.29 a bushel (-3.18%) and the contract expiring on July/23 closed at USD 14.07 a bushel ( -3.70%). Domestic logistics in Brazil, especially regarding outflow to ports, has seen an increase in demand. Consequently, prices reflect this increase due to the inability to increase the supply of road transport. This logistical bottleneck has influenced the drop in soy prices for producers and delayed shipments to ports. In addition, the main grain outflow ports are operating at their maximum capacities, with long queues for loading and unloading ships to transport soybeans. With the difficulty of selling grains and the drop in prices in the physical market, many producers are choosing to store their products, generating overcrowding of warehouses, which, consequently, raises storage costs for producers. Faced with Brazilian logistical problems, China, the largest buyer of soybeans in the world, focused its purchases on shipment in April, in the United States. According to Ruan Sene, market analyst at Grão Direto, American soy has been dropping in price precisely to be competitive with Brazilian soy, and even though it is still a little more expensive, for the Asian country it pays to pay a little more to have soy shipped still in the month of April. This flight from short-term demand may provide relief for Brazilian ports.
How Is the Soybean Crop in Brazil Going? (Mar 28)
The latest information regarding soy quality is encouraging for some Brazilian states. According to the Crop Progress Bulletin released by the National Supply Company (Conab), in Mato Grosso, the harvest is coming to an end, concentrated mainly in the East region, and the yields achieved have been considered excellent by farmers. In Goiás, the harvest progresses in all regions, with good grain quality and excellent yields being achieved. On the other hand, the situation is not the same in all states. In Rio Grande do Sul, the harvest progresses slowly, as most areas are not ready for the trail yet. In addition, the crops show great variation and the rains that occurred were not enough to reverse the crop failure. In Minas Gerais, the driest week helped advance the harvest, while in Paraná, the driest weather in the last week allowed a great advance in the harvest. Although grain damage has been reported, most of the soybean harvested has good quality and higher-than-expected productivity. In Santa Catarina, the harvest progresses with excellent results. Regarding the harvest of the current season, there was an important increase concerning the previous week, reaching 69.1% in 12 states of the country, but still slower than the pace registered in the previous season. The state with the greatest progress is Mato Grosso, which has completed 99.2% of the harvest, followed by Mato Grosso do Sul, with 90.0%. However, some states still present an advance below that registered in the previous harvest, such as Santa Catarina, which advanced only 10.0% in the last week, and Rio Grande do Sul, which reached only 5.0% of the advance.
Anec Reduces Export Estimates for Soy (Mar 28)
The National Association of Cereal Exporters (Anec) lowered its soybean export projection from Brazil in March to 15.197M MT, down from 15.388M MT expected in W12. In the case of soybean meal, the reduction was more pronounced, to 1.757M MT, compared to 1.787M MT expected a week ago. In the week of March 19th to 25th, Brazil shipped abroad 3.6M MT of soy, and 465.63K MT of soy bran.
Brazilian Soybean Harvest Reaches 77% In Paraná Area (Mar 28)
The 2022/23 soy harvest in Paraná reached 77% of the state's areas until Mar 20, up 17% points compared to last week's index, according to data from the Department of Rural Economy (Deral). Despite the advance, the harvest in the second largest producer of soybeans in Brazil is still delayed in comparison with past harvests, due to climatic factors. For Deral specialist Edmar Gervásio, the progress of work in the last week helped to reduce the delay. "Today we can say that it is very close to normality. As we still have a harvest window (favorable weather), possibly next week the soy harvest will be heading towards the end", said Gervásio.
Brazil’s Leading Exports Depend on China, 70% Of Soybeans (Mar 29)
According to government data, soy leads Brazil’s export basket, generating USD 46.5B in 2022, of which shipments to China accounted for more than USD 31.8B, representing more than 68% of the total. According to the Ministry of Agriculture, it was the highest revenue in history, with oilseed shipments in 2022 up 17% over 2021.
Brazil Will Guarantee up to 50% Of Argentina’s Soy Imports After Drought (Mar 29)
Brazil is expected to supply half of the soy that Argentina will even import to keep its industrial park operating, in the face of a historic drought that has devastated the 2022/23 crop in the country, which is usually the largest exporter of oil and oilseed meal, according to analysts. Faced with an Argentine harvest estimated by the market at around 25M MT, against 42M MT last season, the neighboring country will be able to import up to 10M MT of soy, or more than double the volume acquired in previous years, when origin was mainly Paraguay. With a record harvest, Brazil could increase shipments to Argentina by at least ten times, said the head of Latam Grains at hEDGEpoint Global Markets, Sol Arcidiacono, who operates in Rosario, the main Argentine production hub of bran and soybean oil. She recalled that the annual average of soy shipments from Brazil to Argentina would normally be 300K MT, but in 2023, Brazilians could be responsible for supplying at least 3M MT, since Paraguay would not be able to supply the volumes needed by Argentines.
Boom Year for Brazilian Farmers With Record Soybean Crop and Drought Punishing Argentine Production (Mar 29)
Boom year for Brazilian farmers with record soybean crops and drought punishing Argentine production. Abiove now estimates Brazil’s soy production at a record 153.6M MT, 1M more than the last projection last January. The new forecast comes as farmers have reaped more than 50% of the country’s fields, and shows an 18.2% increase compared to the previous cycle when the crop was hit by a drought in southern states. The forecast for Brazilian soybean exports in 2023 has also increased by 300K MT to a record 92.3M MT, Abiove said, 17.2% above the 78.7M MT seen in 2022. Brazilian estimates are good news for local farmers since Chinese demand remains strong and Argentine growers grapple with weather issues and lower production volume. Abiove kept the projection for domestic soy processing at the unprecedented level of 52.5M MT for 2023, 1.6M MT more than in 2022.
Paraná Raises Soybean Harvest Forecast to Record (Mar 30)
Paraná's 2022/23 soybean harvest was estimated on Mar 30 at a record 22.17M MT, the Department of Rural Economy (Deral) pointed out, raising the projection by 1.3M MT in comparison with the forecast released at the beginning of the month, with better yields in the face of heavy rains. With that, the harvest in the second soybean producer in Brazil in 2022/23 should increase by 82% compared to the last harvest, when the drought hit the crops, according to figures from the Secretariat of Agriculture of Paraná. Paraná production is an important reinforcement in the national numbers, which point to historical levels of more than 150M MT and may be close to the total crop of Argentina, generally the third largest producer in the world, but which must have reduced the harvest by more than 40% to levels of 25M MT due to the drought.
Soybean Production Cost in Mato Grosso, Brazil Falls in February Driven by Inputs (Mar 30)
The Mato Grosso Institute of Agricultural Economics (Imea) estimated a lower production cost of 2023/24 soybeans in February. “The cost for the season was USD 849.20/ha (BRL 4,307.66), a reduction of 0.31% in the monthly comparison and 12.27% compared to the 2022/23 harvest”, he said in a report on the crop.“ The devaluation in relation to the past harvest is guided by the decrease in the prices of inputs (seeds, fertilizers, and correctives), which, in turn, is a reflection of the lower demand for products at the beginning of purchases for the cycle. Concerning the Effective Operating Cost (EOC), it dropped by 6.68% compared to the previous harvest”, he highlighted. According to IMEA, the acquisition of inputs for the 2023/24 cycle is delayed in Mato Grosso. "With the price of soybeans under pressure, the producer must take advantage of market opportunities to be able to minimize costs at the end of the season". Until Mar 24, 97.48% of the area sown with soybeans in the State had been harvested.
The Soybean Harvest in Brazil Is Going Well This Week (Mar 30)
A new survey by DATAGRO Grains, which was carried out until March 24, indicated that the Brazilian soybean harvest for the 2022/23 crop reached 71.6% of the projected area. In this context, it is possible to state that the pace of work remains far from 79.2% at the same time last year and is also lower than the multi-annual average of 74.6%. In addition, data on soybean productivity are also encouraging, as the numbers are considered good.
Break in Argentine Soy Crop Limits Fall in Prices in Brazil, Says Cepea (Mar 31)
The break in the 2022/23 soybean crop in Argentina this week limited the decline in prices in Brazil, which had been pressured by the advance of a record Brazilian harvest, according to an assessment published on Mar 31 by the Centro de Advanced Studies on Applied Economics (Cepea), from Esalq/USP. “While the Brazilian harvest continues at a good pace and is heading towards record production, in Argentina the beginning of the harvest has caused estimates to be readjusted downwards again. This context in Argentina ended up raising soy complex prices in the United States and limiting the downward movement in Brazil this week”, pointed out Cepea. According to the Buenos Aires Grain Exchange, soybean production in Argentina is estimated at 25M MT, 44.4% below the average of the last five harvests. The harvest started in the regions of Junín, Baigorrita, Centro-East of Entre Ríos, in the south of Córdoba, and La Carlota. Brazil must supply up to half of the soybeans that Argentina will import to keep its industrial park operating, experts told Reuters this week. Given the external rise, liquidity in the Brazilian market gained pace this week, and the sharpest falls in prices were interrupted. Even so, from March 23 to 30, the ESALQ/BM&FBovespa Indicator, Paranaguá (PR) retreated 0.7%, changing to USD 30.17/60kg bag (153.06 reais) on Mar 30. Already considering the comparison between the February and March averages, the drop was 5.9%, the current lowest since June/20, in real terms (based on the February/2223 IGP-DI).
United States
Soybean Shipments in the 2022/23 Season Are 3% Higher Than in the Same Period Last Year (Mar 27)
The USDA (United States Department of Agriculture) brought updated figures for weekly shipments of grains from the country with soybeans within expectations. In the week ended March 23, the US shipped 888.71K MT of soybeans, while the market was expecting something between 250K MT and 900K MT. With this volume, the total shipped in the season reaches 44.953M MT, 3% more than in the same period last year.
Solid Gains for Soybeans (Mar 28)
Soybeans were sharply higher on commercial and technical buying. Soybeans continued to bounce off the recent lows, helped out on Mar 28 by the strength in soybean meal and the lower dollar. Soybean oil was down early but rallied with gains in crude oil. The USDA reports are expected to show higher planted areas and tighter stocks. The trade continues to monitor harvest activity in Brazil, now close to 80% complete, along with the conditions in Argentina. Recent rainfall in Argentina appears to have stabilized crops and might improve prospects for later planted beans. Meanwhile, the increasing amount of Brazilian soybeans on the market is impacting demand for US beans. The USDA’s next round of supply, demand, and production numbers is out on April 11th, with CONAB’s updated outlook for Brazil set for April 13th.
US Farmers Will Give Preference to the Cultivation of Drought-Resistant Crops (Mar 28)
According to the results of a survey conducted on March 4-14 this year. According to Farm Futures experts, during the spring planting campaign, US farmers will prefer more drought-tolerant crops, as low soil moisture is a serious problem. As for soybeans, the oilseed area could expand to 89.6M acres (up 2.5% YoY), amid growing interest in diesel production, which would be the second-largest figure for the US. The US soybean harvest in 2023/24 MY may reach a record 4.62B bushels.
USDA Brings Quarterly US Soybean Inventories Below Average Expectations (Mar 31)
On Mar 31, the USDA (United States Department of Agriculture) reported its quarterly grain stocks bulletin in the country at the March 1 position. In the case of soybeans, quarterly stocks were estimated by the USDA at 45.86M MT, against 47.41M MT expected by the market, according to average projections. In March 2022 the number was 52.58M MT.
USDA Brings Soybean Area in the 2023/24 Crop Season Equal to Outlook Forum Estimate (Mar 31)
The USDA (United States Department of Agriculture) brought on Mar 31, the first projections of planting area for the 2023/24 crop, and little surprised with the figures presented at the Agricultural Outlook Forum, in February. For soybeans, the area was estimated at 35.41M ha, the same number as last month but slightly larger than that recorded in the past harvest, of 35.39M ha. The range expected by the market was from 35.48 to 36.27M ha.
Argentina
Soybean Imports Grow, but Remain Far From Record Levels at the End of 2021/22 (Mar 27)
In the first two months of the year, soybean imports were registered for just over 400K MT. Although it is a number above the last two years, it is far from the volumes imported in 2020 and 2019, years with harvest expectations that are very different from the imminent 2022/23 campaign. Brazil has been emerging in this first part of the year as a growing supplier of soybeans for the Argentine oil industry, in addition to the high supply from Paraguay. While Paraguayan soy usually reaches the Up River industries by barge, about half of the soy that came from Brazil did so by ship. Furthermore, by March there were already close to 170K MT of soybeans coming from Brazil in ships, between unloaded and to be unloaded. Without considering barges and trucks, March is expected with interesting soybean import volumes for industrialization and export. It is worth remembering that until now we continue to refer to the 2021/22 campaign. For the coming 2022/23, 7.9MT of soybean imports are expected, more than double the 3.3MT with which it expects to end this business year.
Argentina Becoming Net Importer of Soybean to Feed Its Grain Processing Industry (Mar 28)
Argentina’s soybean imports are expected to more than double this season due to the devastating impacts of the historic drought on the country’s 2022/23 harvest, the country’s Rosario grains exchange said in a report. Argentina is the world’s leading exporter of soybean oil and meal, due to a powerful grain processing industry that can crush up to 73M MT of the oilseed per year, but serious losses from the drought are accentuating the need for imports from Paraguay and Brazil. The exchange predicts that Argentina will import 7.9M MT of soybean this season, up 139% from the previous season, on the back of a harvest of just 27M MT from a previous harvest of 42.2M MT. Argentine firms imported just over 400K MT of soybeans in the first two months of 2023, the exchange added, including about 170K MT from Brazil so far in March. Last week, the president of Argentina’s grain processing chamber CIARA said the sector is in crisis and operating at the lowest capacity in history.
BCR Warns That Argentine Soybeans Would Contribute USD 7.3M Less Than in 2022 (Apr 2)
The possible 25M MT that is expected to be produced would mark the smallest harvest since the 1999/20 campaign. This would lead exports to fall by 30% compared to last year and to lose leadership in the main market. Since the 1990s, soybeans have been the main grain in national production without question. However, in recent years soybean has been dethroned from first place: in the recent past a progressive drop in the area devoted to cultivation has been observed, being replaced mainly by corn, with the latter occupying the first position in production since 2019/20, according to the Rosario Stock Exchange. This trend will be repeated in the current campaign, although with production levels lower than the average of recent campaigns due to the severe drought (35 Mt of corn vs. 25 Mt of soybeans projected on 22/23 according to the GEA-BCR estimate for March 2023, updated based on their weekly core zone reports). In the current campaign, it is estimated that 16M ha of soybeans were planted, barely 100K ha below the previous campaign. In the last year, the soybean complex generated exports for a total of USD 24.868M, which marked an absolute record in exported value for it. The measures implemented by the National Government (Soybean Dollar I and II) affected this record. Soybean meal is by far the main product exported within the complex and the most relevant in terms of exports of goods in the country; in fact, its contribution alone is superior to all the other export complexes individually. Only in soybean meal, USD 12.041M were exported in 2022, 14% of the national total in goods. In 2023, as a result of the sharp drop in production that will generate a decrease in grinding volumes and in the exportable balance in the campaign, a severe adjustment in exports from the complex is expected. In total, according to the estimates, exports from the soybean complex could be around USD 17.568M, which would mean a 30% drop compared to 2022, around USD 7.3M.
Russia
Preparations for the sowing campaign, renewal of the fleet of machinery, and putting into circulation of unused lands in the Far East were devoted to the working trip of Andrei Razin, Deputy Minister of Agriculture, to Primorsky Krai. These issues were considered at a meeting with the authorities of the agro-industrial complex of the regions of the Far Eastern Federal District. One of the main crops grown in the Far East is soybeans, the district accounts for 36% of the total Russian figure. Last year, its harvest in the Far Eastern Federal District increased by 35% and reached 2.3M MT. The collection of cereals, rice, and potatoes also increased. This year, to maintain positive dynamics, the total sown area is planned to be expanded by 7.5% to 2.3K ha.
China
China’s Forecast for Seeds and Oil Products (Mar 31)
Moderate growth in the animal protein sector is expected to boost China's soybean imports to 97M MT in the 2023/24 marketing year. According to data from the General Administration of Customs of the People's Republic of China, imports increased after the elimination of zero COVID policies in December, to reach a total of 16.2M MT in January-February 2023, an annual increase of 16 %. China's lifting of COVID-related restrictions is expected to boost global consumption of oilseeds. However, the relatively high prices of soybean meal and low yields in the pig and poultry sector continue to discourage the inclusion of soybean meal in animal feed. After a significant increase in soybean area and production in the 22/23 season, it is expected that support policies for soybeans will continue, with an additional 400K MT of production in the 2023/24 season. A soybean volume of 95M MT is forecast for the 2023/24 campaign, above the 94M MT estimated for the 2022/23 campaign. The total use of protein meals in animal feeds in the 2023/24 campaign is expected to increase annually by 1.4% to 98.1M MT.
Poland
Too Small Acreage of Soybean in Poland (Mar 28)
Over the last few years, the area of soybean cultivation in Poland has increased. However, it is still not enough acreage regarding the demand for soybeans, as well as the number of imported seeds. Subsidies are an opportunity to improve the profitability of production. According to information published by the Polish Soja Association, last season the domestic soybean resources amounted to about 120K MT, while the number of imported seeds was over 112K MT. The cultivation area increased in 2022 to nearly 48K ha, but it is not enough to meet the demand of Polish processing plants.
Senegal
Soybean Production Gets a Boost With USD 108M Funding (Mar 30)
The government will invest an estimated USD 108M to improve soybean production/best practices, as well as develop the grain’s value chain to curb post-harvest losses over the next five years. The investment is in line with key resolutions of the recently held Dakar II Summit in Senegal and is expected to expand certified seed production to 17.5K MT yearly, and also develop 50K ha of new land for soybean production. It is anticipated that soybean cultivation will increase from the current 218K MT per year to 400K MT annually, and contribute to a yield upsurge of 40% after the investment.