Feb 10, 2020
China's Grain Purchases Focused on Brazilian Soybeans
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
It was evident last week that China prefers to purchase cheaper soybeans from Brazil instead of the U.S. Last week, China purchased at least 30 vessels of Brazilian soybeans for delivery starting in March in addition to the 10 vessels it purchased the week before.
One of the incentives for the purchases was the weaker Brazilian currency. Last Friday the Brazilian real hit the weakest point in its history compared to the U.S. dollar closing at 4.32 to the dollar. The weaker currency makes Brazilian soybeans more competitive on the world market, which was illustrated by China's aggressive purchases of Brazilian soybeans.
China has also been an aggressive buyer of Brazilian meats. The Brazilian Association of Animal Protein (ABPA) reported last week that Brazilian poultry exports in January increased 14.9% and that China's purchase of Brazilian poultry increased 87% in January.
The director of Brazil's National Association of Cereal Exporters (ANEC) explained that the slower start to Brazilian soybean exports in January were the result of a slow start to the Brazilian soybean harvest and wet weather in the center-west region of the country. Soybean exporters cleaned out the bins in 2018 and exports remained strong in 2019, so most analysts feel Brazilian soybean exports will remain strong in 2020 as well.