Competition for the Brazilian soybean grows; gap between prices at ports and the interior of PR narrows

Cepea, August 18, 2020 – The demand for the Brazilian soybean continues firm, from both domestic processors and importers – there has even been a competition between these purchasers for the product. This scenario pushed up prices in the first fortnight of August, narrowing the gap between the prices paid at Paranaguá port (PR) and those in the interior of Paraná State (PR). By the end of the first fortnight, both Indexes hit new records and, now, have been at the highest real levels since September 2012 (monthly averages were deflated by the IGP-DI from July/20).


Between July 31 and August 14, the ESALQ/BM&FBovespa Index in Paranaguá (PR) rose by 6,8%, to 127.26 BRL/60-kilo bag (23.44 USD/bag) on August 14. It is worth to mention that, in the second week of the month, some bids were at 130 BRL/bag at Paranaguá port. The CEPEA/ESALQ Index in Paraná increased by 9% in the same comparison, averaging 121.54 BRL/bag (22.38 USD/bag) on August 14.


Thus, the gap between the Paranaguá and the Paraná Indexes is the narrowest since 2016, when Brazilian processors were purchasing 35.26% of the volume produced in Brazil. This year, the USDA estimates that 35.12% of the output will be processed in the domestic market.


The increase in the domestic consumption is linked to the higher demand for soybean by-products, which is resulting in high profit margins to processors, although soybean quotes have recently hit new records.


The volume remaining from the current crop is low, and agents from cooperatives claim that not all soybean growers have the product to trade anymore, and the ones that do have soybean are asking higher prices for the product.


Still, Brazilian soybean exports are high. The USDA estimates shipments to reach 93.8 million tons this season (from Oct/19 to Sept/20), 5.06% up compared to that in the previous month (89 million tons). From Oct/19 to Jul/20, Brazil exported 86.71 million tons of soybean, according to data from Secex (Foreign Trade Secretariat).


Firm exports are linked to higher consumption in China, which should be a record in the 2019/20 season. According to the USDA, China may import 98 million tons of the product between Oct/19 and Sept/20, 2.08% more than that estimated last month. For the coming season, imports from China are expected to grow even more, to 99 million tons.




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