Bleak outlook for Brazilian soy, corn foreshadows USD 17 BN loss

Brazil’s trade balance may be driven down by the increasingly bleak outlook for its corn and soybean crops. Based on the present estimates for the prices, production, and exports of both grains, Pine Agronegócios projects a $17.74 billion loss to the country’s trade balance in 2024—a decrease of 5.16% from the close of the previous year.

“A lower average price [of soybeans and corn] tends to discourage rural producers from selling to the international, depending on the profit margin. Conversely, it tends to ensure greater competitiveness when demand is robust,” Pine emphasizes in its report.

The chart below used DataLiner data to show Brazilian soybean exports between Jan 2019 and Nov 2023.

According to the company’s calculations, the average price of soybeans dropped from $0.52 per kilogram in 2023 to a projected $0.43 per kilogram this year. For corn, the value decreased from $0.24 per kilogram to $0.22 over the same comparison.

Despite the negative result for the trade balance, Pine suggests that the projected outcome for 2024 can be seen as a slight correction when compared to the last two years, during which production and exports performed above average.

“However, the problem lies in the low margin offered to producers who faced high input costs and have a moment of low prices in sales,” says the consultancy.

In its latest report on the Brazilian grain crop, the National Harvest Company (Conab) heralded a soybean harvest of 155.3 million tonnes, a volume that would be 0.4% higher than the production of the 2022/23 season. On the other hand, some private companies project a harvest below 150 million tonnes.

As for corn, whose estimates are still in the preliminary stage, Brazilian production is expected to total 117.6 million tonnes, a decrease of 11% compared to the previous harvest season.

Tags: soybean, corn, export, Brazil