Sales are anticipated, and prices set records in Brazil

Cepea, January 4, 2021 – As a high amount of the 2019/20 crop was traded in advance (in 2019), Brazilian soybean farmers began 2020 unwilling to sell large volumes of soybean, focused on the accomplishment of contracts. The harvesting delay also brought uncertainties about the volume to be produced, which, in the end, set a record, totaling 124.8 million tons, according to Conab (Brazil’s National Company for Food Supply).


After February, the US dollar surpassed 5.00 BRL, increasing the competition between domestic and international purchasers for the Brazilian soybean. This scenario narrowed the price gap between Paranaguá port (PR) and the interior of Paraná State.


As regards demand, Brazilian processors purchased larger volumes aiming to meet the firm demand for soybean by-products. Besides, at that time, the national exports of soybean meal and oil were favored by lower supply in Argentina – in an attempt to stop the spread of covid-19, the Argentinean government limited activities at ports, meanwhile, crop failure was confirmed in the country.


In the second quarter of 2020, Brazilian soybean exports increased as the demand from China for the national product was a record. However, in the second semester of the year, with the low surplus and record prices, the Brazilian soybean became less attractive to importers. Thus, international purchases focused on the American soybean, whose prices surpassed 11.00 USD/bushel – this level had not been observed since 2016.


After that, the low volume supplied in Brazil was disputed by local processors, which bid prices higher than the export parity, which is unusual. This context led domestic prices to renew the records month by month and encouraged agents to trade the output from the two coming crops.


In 2020 (until December 22), the soybean Indexes ESALQ/BM&FBovespa Paranaguá and CEPEA/ESALQ Paraná averaged 120.75 BRL/bag and 115.41 BRL/bag, respectively, 46.9% and 50.3% up from that in 2019.


With prices at high levels and low supply, in October, the Brazilian government exempted taxes on soybean imports from out of Mercosur. Thus, some national processors increased imports aiming to supply the Brazilian market with soybean meal and oil.


BY-PRODUCTS – Despite the valuation of soybean, Brazilian processors managed to pass on higher costs to by-products, due to the firm demand. This scenario favored the profit margins of processors during the entire year.


Thus, the price paid for crude degummed soybean oil in São Paulo city averaged 7,01825 BRL per ton in 2020 (up to Dec. 22), 51.3% higher than that in 2019. On the average of the regions surveyed by Cepea, prices for soybean meal rose by 47.6% between 2019 and 2020.




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