Apr 30, 2020
Brazil Soy Supply Should be Adequate to Meet Demand in 2020
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Even though Brazil's soybean exports are running at a record pace and domestic crushers are expected to process a record amount of soybeans in 2020, Brazil should still have enough soybeans to meet the demand until Brazilian farmers start to harvest their 2020/21 soybean crop early in January of 2021. That was the opinion of Bartolomeu Braz Pereira, President of the Soybean & Corn Producers Association of Brazil (Aprosoja-Brasil) in a video conference earlier this week hosted by the consulting firm Datagro and reported by Noticias Agricolas.
Also participating in the conference was the president of the Brazilian Association of Vegetable Oil Industries (Abiove), the director of the National Association of Grain Exporters (ANEC), and it was moderated by Flavio Franca Junior the head of the grain sector of Datagro. The objective of bringing together these industry experts was to understand the dimensions of the soybean market during this time of crisis caused by the Covid-19 pandemic.
ANEC confirmed that Brazilian soybean exports set records during March and April due mainly to the devaluation of the Brazilian currency and they estimate that Brazil will export 73 million tons of soybeans and 31 to 32 million tons of corn in 2020. They also project strong volumes of soybean meal and soybean oil exports in 2020 at 16.5 million tons and 500,000 tons respectively.
There had been concerns about potential logistical bottlenecks due to the coronavirus, but thus far, everything is operating normally at Brazilian ports and Brazilian crushers.
Abiove is estimating the soybean crush in 2020 will set a new record at 44.5 million tons, which would be 1 million tons more than in 2019. The demand for soybean oil to produce biodiesel is expected to decline in 2020 due to the travel restrictions caused by Covid-19. The amount of soybean oil used in biodiesel is capped at 80% as a way to encourage the production of other types of vegetable oils. Biodiesel demand is expected to improve as travel restrictions are loosened.
Abiove expects the demand for soybean meal from the Brazilian livestock sector to remain strong in 2020 due to surging meat exports especially to China.
Looking forward, panel members are expecting less credit to be made available to the Brazilian farmers by the federal government in their 2020/21 Harvest Plan due to the worsening economic situation in the country. Low interest subsidized production loans are the staple of Brazil's annual Harvest Plans.