Brazilian domestic soybean market maintains steady business

The market went through a week of adjustments on the CBOT, after the recent surge in prices, considered disproportionate to the real commercial situation between China and the United States. Soymeal prices show signs of correction but should still seek lower levels, possibly close to the gap in the region of USD 300.00 per short ton.

Regarding the futures market, players continue to monitor Chinese imports of US soybeans. To date, there are only records of three shipments by COFCO, totaling 180,000 tons. However, according to the White House, China is expected to purchase 12 mln tons by the end of 2025, which should begin to appear in the weekly US export reports, still suspended due to the US government shutdown.

Last week, China reduced the import tariff on US soybeans to 13%, which, even so, does not make the US product competitive compared to Brazilian soybeans, which pay only a 3% tariff. Even with the recent surge on the CBOT, the US flat price remains much higher than the Brazilian one, also in the spot market, where the difference is smaller, but in the new crop it is brutal — more than USD 20 to USD 30 per ton at ports. In addition, premiums in the Gulf are higher than Brazilian premiums, which maintains Brazil’s competitive advantage over the United States.

These factors raise strong doubts about China’s effective ability to buy the 12 mln tons by the end of 2025. Additionally, the market seems to ignore the potential adjustment of stocks in the United States. Considering that Brazil is expected to export approximately 80 to 81 mln tons to China, even with China’s purchase of 12 mln tons from the United States, there would still be a significant deficit in US exports. To avoid a surge in ending stocks, USDA would have to reduce US yield from 53.6 to something between 51 and 51.5 bushels per acre, which would imply a cut of 6 to 7 mln tons in production — quite significant.

If this reduction occurs, it would be strange from a technical point of view, since yield has been surprisingly positive during the harvest, indicating that previous estimates were distorted. On the other hand, if there are no cuts in yield or area, it will be inevitable that US stocks will rise from the current 8.6 mln (most recent quarterly data) to above 10 mln, possibly even reaching 12 to 13 mln tons, unless domestic crushing increases to 75 to 76 mln — an unjustified outlier scenario.

The sharp rise in soymeal prices, of USD 20 to 30 per short ton, was mainly driven by political and environmental issues in the European Union, which has been imposing a risk rating on exporting countries, such as Brazil, without a real basis in deforestation. This pressure increased the price of soybeans, boosted by the US crush margin. If soybean prices had not risen above USD 11.00 per bushel, the crushing spread would have jumped to USD 2.00 to 2.20 per bushel, due to the surge in soymeal prices, since soyoil continues on a downward trajectory. With the rise in soybean prices, the spread returned to normal, but if soymeal maintains its correction movement toward USD 300.00, this should pressure soybean prices, which may fall back below USD 11.00, seeking to close the recently opened gap.

Brazilian soybean sales are still progressing slowly, with delays compared to previous years, especially for the new crop. In the spot market, it is natural for the pace to slow down at this time of year; even so, a slight increase in trading activity has been observed in recent weeks.

However, with growers focused on planting and waiting for firmer prices in the physical market, sales have been sporadic — which represents a strategic mistake. As time goes on, trading companies are closing their export programs, while the domestic market — especially crushing industries — no longer shows consistent demand in the spot market. This movement tends to alter the price curve, shifting the price differential from the old crop to the new crop, where prices are lower.

Until the beginning of November, sales of the old crop reached 92.4%, below the 95.6% recorded in the same period of 2024. The five-year average for the same period is 94.6%. For the new crop, the delay is more significant: about 25.5% of the production has been sold, compared to 31.2% in the same period last year. The five-year average indicates 34.1%, showing a slower pace that could have important consequences, especially at the beginning of the new crop.

Tags: soybeans, imports, shipments, soymeal, Market, China, export, prices, United States