São Paulo – If all goes as planned with its crops, the United States will export from 39 to 40 million tonnes of soy from the harvest due in late September, pushing down the commodity’s prices worldwide. Still, America’s higher share of the international market should not cause Brazil’s exports of the grain to lose space. In its last crop, the United States weathered one of its worst droughts ever, which drove up global soy prices and caused a tighter supply-to-demand ratio.
“Brazil will not be affected,” says the Foreign Agribusiness Affairs secretary at the Ministry of Agriculture, Livestock and Supply, Célio Porto, who noted that the country has the opportunity to export at a time when the United States crop has not reached the world’s markets yet. Brazil’s peak harvesting period is the first half, and the US’ is the second half. Porto also claims that as they realized soy prices were good, exporters went about speeding up their sales. On the other hand, soya bran and oil, which need time to be processed after harvest, did not benefit as much.
Increased consumption in China should also ensure Brazil’s share of the foreign market, according to FC Stone consultant Glauco Monte. “Demand is going strong right now,” says the specialist, citing the US Department of Agriculture’s forecast of a 10 million tonne increase in Chinese consumption, from 59 million to 69 million tonnes. That should absorb the US’ 3- to 4-million surplus export volume, as well as Brazil’s own export, as the country is expected to ship 41.5 million tonnes abroad, as against 37.9 million tonnes in the last crop.
Over the past few months, despite issues with its crops, the United States has exported. The reasons include the fact that Brazil was rendered unable to supply larger volumes of grain due to logistics issues such as ports congestion, even though the country offered a much lower price for its soy than did the US.
Monte believes that because the two countries’ crops enter the market at different times, even if the United States crop is good, Brazil should not lose its space as a supplier to the Arab countries. From January through May this year, Brazil shipped US$ 215 million worth of soy to the Arabs, as against US$ 206 million in the same period of 2012. “I do not think Brazil’s export volume will suffer,” says Célio Porto regarding sales to Arab countries and otherwise.
Brazil is currently the leading soy exporting country in the world, but the United States is the leading producer. The American domestic market is composed of 313 million people. In the coming crop, the country will have a soy surplus to export, but it will need to replenish its inventories first, as they are running low due to the drought. And the US’ soy harvest volumes, Porto notes, are not completely defined because the crop is still underway.
*Translated by Gabriel Pomerancblum
