Brazil, increasingly expected to surpass the U.S. as the world’s top soybean producer and exporter in 2013, probably won’t ship abroad any significant volumes of the oilseed until February.
The South American country heavily frontloaded its exports of this year’s crop, as a favorable exchange rate and rising prices sent producers scrambling to get their soybeans to the ports starting in March. But a virtual lack of soybean exports in coming months could exacerbate a narrowing foreign trade surplus.
Through the first weeks of September, Brazil exported 30 million metric tons of soybeans since February, according to data published Monday by the Trade Ministry. Grains-crushing association Abiove on Monday reiterated its export forecast of 30.5 million tons for the current marketing year, which ends Jan. 31.
“In Brazil, exports of the grain are really arriving at the end,” Abiove President Fabio Trigueirinho said in a telephone interview, adding that only “residual” volumes remain available to be shipped abroad until the next crop starts coming in. “We’re maintaining that number for now.”
South American soybean producers generally try to get their exports to market by the time the U.S. harvest begins in September. Even so, Brazil in recent years has tended to continue exporting at least a modest volume of the oilseed between October and January. Last year’s bumper crop left the country with enough soybeans in stock to export 5.7 million tons, an unusually high volume, between October 2011 and January 2012.
This year, on the other hand, a drought in southern states left the soybean crop at an estimated 66.6 million tons, well below potential and 11% short of 2011 output.
Soybeans rank third among Brazil’s top exports, behind iron ore and crude oil, and currently fetch around $600 per ton, according to the Trade Ministry.
Sidnei Nehme, director of Sao Paulo trade house NGO, said he expects the local currency market to feel the absence of soybean revenue in coming months.
“I think our currency flows have a large potential to turn negative in the second half of the year,” Mr. Nehme said, referring to the amount of money that flows in and out of the country through such channels as trade and investment. Negative tends to weaken a currency.
Mr. Nehme noted that Brazil’s trade balance this year hasn’t been “so brilliant” even with the frontloaded soybean exports.
From January through the first three weeks of September, Brazil’s trade surplus stood at $15.3 billion, down from $22.5 billion a year earlier, the Trade Ministry said Monday. Soybean exports brought around $16 billion into the country.
Our View: SAFRAS reported a few weeks ago that this year’s crop is 40% spoken for. Anecdotally many suspect they are well over 50% hedged, and from what we’ve read above we don’t don’t these reports. The lack of soybean revenue in the coming months could accentuate a weak foreign trade balance.
