Lower demand and US dollar drops press down quotes in Brazil

Cepea, September 17 2019 – The international demand for the Brazilian soybean was low in the first fortnight of September, pressing down quotes in the domestic market – in August, exports were the lowest since January 2019. This scenario is largely linked to the reduction in the purchases from China. Although the Netherlands has increased purchases from Brazil this season, China has imported 6.03 million tons less (between January and August) than in the same period last year.

 

In Brazil, demand was low too, since most processing plants seem to have inventories until October. Besides, the US dollar devaluation against Real in the first half of the month increased pressure on domestic quotes. Lower domestic prices and the nearness of the USDA’s report on global supply and demand, which was about to be released, reduced the trading pace in Brazil.hh

 

According to the report from the USDA, released on September 12, the ending stocks from the United States in the 2019/20 season should decrease by 15.8%, now 36.3% lower than that forecast for the 2018/19 crop, which ends this month. The USDA also revised down ending stocks estimates for the 2019/20 season in Argentina, China and the European Union, while for Brazil, ending stocks estimates were revised up.

 

SUPPLY AND DEMAND IN BRAZIL – In a report released on Sept. 10, Conab (National Company for Food Supply) revised down the Brazilian soybean output in the 2018/19 season, to 115.03 million tons. This volume is 3.56% smaller than that in the 2017/18 crop, and it should be the second largest in all times.

 

Estimates for soybean consumption in Brazil in the 2018/19 crop were kept at 45.2 million tons, and exports, at 70 million tons between January and December 2019. Ending stocks for soybean, in December/19, were revised down by 3% compared to that forecast in August, to 1.37 million tons.

 

Estimates for soybean meal consumption, in turn, were revised down to 15.72 million tons, increasing ending stocks to 2.8 million tons.

 

Sowing of the 2019/20 crop has already started in some regions from western Paraná. According to the report from Deral/Seab, until Sept. 9, 1% of the area had been sown, due to low soil moisture. Many growers are cautious, waiting for larger rain volumes in order to start fieldwork.

 

PRICES – The ESALQ/BM&FBovespa soybean Index at Paranaguá and the CEPEA/ESALQ Index for Paraná dropped 3.5% and 3%, respectively, between August 30 and September 13, closing at 85.39 BRL (20.87 USD) and at 79.77 BRL (19.50 USD) per 60-kilo bag on Sept. 13. The US dollar, in turn, closed at 4.091 BRL on Sept. 13, 0.9% down compared to that on August 30.

 

EXPORTS – In August, Brazil exported 5.32 million tons of soybean, 32% less than the amount shipped in July and 34.5% down against that from August/18. From January to August 2019, Brazil shipped 59.37 million tons of soybean, against 64.59 million tons in the same period last year.

 

(Cepea-Brazil)

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