Reduced demand from China lowers soybean prices in Brazil

Prices for soybeans in Brazil in early January fell sharply amid increased supply of new crop and reduced export demand, particularly from China.

China is reducing purchases of soybeans in anticipation of further price declines in South America, given the increase in soybean stocks and lower pork prices.

According to estimates of CNGOIC (China National Grain and Oil Information Center), soybean stocks in China increased by 8% during the week and as of January 12 amounted to 7 million tons, which was 33% higher than in December, and 65% higher than last year. The stocks of soybean meal amounted to 980 thsd tonnes (-1% w/w, +11% m/m, +100% y/y), and soybean oil – 890 thsd tonnes (-2%, +5%, +25%).

USDA experts forecast that in 2023/24 MY Brazil will harvest 157 mln tonnes of soybeans, Argentina – 50 mln tonnes, and Paraguay – 10.3 mln tonnes, i.e. the total amount will exceed 220.2 mln tonnes, which is 13% higher than 195 mln tonnes harvested by these countries last year.

According to Agricensus, from January 2 to January 18, the prices for Brazilian soybeans with delivery to the port of Paranaguá fell by 17% from 147 to 122 reais per bag or from 496.95 to 412.44 $/t. In the largest producing state of Mato Grosso, the spot price in Rondonópolis fell from 126 to 108 reais per bag, or from 425.96 to 365.11 $/t. Prices continue to fall, despite lower crop forecasts in this state to 39-43 million tons compared to last year’s 45.3 million tons.

Brazilian farmers are holding back sales of soybeans in anticipation of the completion of the harvest and rising prices.

At the same time, soybean growing conditions continue to improve in Argentina. According to the BAGE exchange, 97% of the area was planted with soybeans, and the number of crops in good or excellent condition increased by 4% to 55% over the week. Local agencies estimate the soybean harvest at 55-56 million tons, which is significantly higher than the USDA forecast.

March futures for soybeans on the Chicago stock exchange fell to a 2-year low of 445,8 $/t (-8% for the month, 9.7% for the year).

Tags: soybean, China, Brazil, prices