Brazilian soyabean prices rose 13% to USD 376.5/tonne in the four weeks to 24th September in line with strong Chinese demand. Prices spiked to a two-year high of USD 385.8/tonne on 18th September before trending down slightly over the week, and remain 13% above the two-year average.
Chinese authorities have been looking to expand domestic supplies of pork to ensure self-sufficiency, which has spurred high demand for soyabeans for crushing into soymeal. Brazilian soyabean exports to China were 8.2 million tonnes in August, 22% higher compared with August 2019, as a weak Brazilian real helped boost Brazil’s export competitiveness. According to Brazilian governmental data, total soyabean exports for the Jan-Aug period reached 76 million tonnes, up 36% y-o-y, with 73% of the total purchased by China.
However, the US is increasing its share of the Chinese market, which is expected to impact the global dynamics of soyabean trade. Despite the ongoing trade tensions between the US and China, as part of the Phase One agreement reached in January, China is expected to shift from Brazilian soyabean purchases to US supply in Q4 2020. According to the United States Department of Agriculture (USDA), US soyabean export volume is forecast to rise 26% y-o-y to 58 million tonnes in 2020/21 marketing year, and growing sales to China will likely come at the expense of exports from Brazil. In contrast, Brazilian exports are estimated to fall 9% y-o-y to 85 million tonnes over the 2020/21 season, which will likely put some downward pressure on Brazilian soyabean prices.
Brazilian soyabean production is projected to reach 133.5 million tonnes in 2020/21, according to state statistics agency Conab, rising 7% y-o-y due to increased national acreage. Any increase in production is dependent on whether a mild La Nina causes dryer conditions, with Brazilian soyabean supply likely to be tight until harvests begin in January 2021.