Brazil's braking of soy expansion unlikely to prevent global stock swell -Braun
Repeats column first published on Wednesday. The opinions expressed here are those of the author, a market analyst for Reuters.
By Karen Braun
NAPERVILLE, Illinois, Aug 28 (Reuters) -Brazil’s seemingly unstoppable expansion in soybean plantings over the last several years has cemented the country as the world’s source for beans, as it now accounts for nearly 60% of all exports versus around 40% just a decade ago.
This year’s price slump has the oilseed looking less attractive than normal to Brazilian producers, though a record crop and the further padding of global supplies may be inevitable.
China’s COFCO International on Tuesday said the firm expects Brazil’s soy plantings in 2024-25 to grow at the slowest pace in a decade due to lower profit margins for farmers, similar to the theory offered earlier this year by the U.S. Department of Agriculture.
The prediction is logical, as the largest annual soy area increases in Brazil came during periods of lower global stocks and stocks-to-use, and vice versa.
According to Brazilian statistics agency Conab, yearly increases in soy plantings within the last four seasons range from 4.4% to 7%, though they spanned 2% to 3.7% between 2015-16 and 2019-20, when prices were low and supplies were high.
USDA sees global soybean stocks hitting all-time highs in 2024-25, almost 22 million metric tons more than in the prior year, and stocks-to-use are pegged barely shy of 2018-19’s record.
Brazil will play a large role in generating the surplus of beans as USDA projects a soy crop 16 million tons (10%) larger than in the prior season, with area rising 3.3%, though global soybean consumption is set to rise just 5% on the year.
Brazilian farmers will start sowing soybeans for the 2024-25 harvest next month.
MORE PLANTINGS, BIGGER YIELDS, MORE EXPORTS
Brazil’s soybean plantings have doubled in the last 15 years, reaching a record 46 million hectares (113.7 million acres) in 2023-24. That compares with 35.2 million hectares sown to soy this year in the United States, the No. 2 bean exporter.
Northern Brazil features the most noteworthy area expansion. Some 3.4 million hectares of beans were sown there for the 2023-24 harvest, up nearly sevenfold in just 15 years.
Those Northern hectares represented just 7% of last year’s national area, but they account for 15% of the country’s total rise in soy plantings within the last three-to-five years.
At the same time, soybean exports out of Brazil’s north ports have nearly doubled in the last five years, accounting for about 35% of last year’s shipments. That compares with about 23% five years earlier.
A decade ago, Brazil had just a handful of major ports that processed substantial soybean shipments, resulting in plentiful delays and logistical bottlenecks. But the spreading of the soybean industry farther north has alleviated some of this risk.
The spread in production also limits weather-related losses as extreme conditions rarely occur at a nationwide level, supporting the increase in Brazil’s soy yields.
Brazilian farmers, like U.S. ones, are getting better at growing soybeans. Brazil’s bean yields have risen more than 20% over the last 15 years, very similar to the U.S. rate, and yields are comparable between the two countries.
With global soybean prices near four-year lows and both Brazil and the United States set to harvest record soy crops in 2024-25, producers in both countries may need to ease back on plantings for 2025-26 and beyond, especially if Chinese demand continues to lag.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Graphic- Brazil soybean plantings, year-on-year https://tmsnrt.rs/474XaRn
Graphic- Planted soybean area in Brazil https://tmsnrt.rs/4dGupNA
Writing by Karen Braun
Editing by Matthew Lewis
Senaste nytt
Ansvarsfriskrivning: XM Group-enheter tillhandahåller sin tjänst enbart för exekvering och tillgången till vår onlinehandelsplattform, som innebär att en person kan se och/eller använda tillgängligt innehåll på eller via webbplatsen, påverkar eller utökar inte detta, vilket inte heller varit avsikten. Denna tillgång och användning omfattas alltid av i) villkor, ii) riskvarningar och iii) fullständig ansvarsfriskrivning. Detta innehåll tillhandahålls därför uteslutande som allmän information. Var framför allt medveten om att innehållet på vår onlinehandelsplattform varken utgör en uppmaning eller ett erbjudande om att ingå några transaktioner på de finansiella marknaderna. Handel på alla finansiella marknader involverar en betydande risk för ditt kapital.
Allt material som publiceras på denna sida är enbart avsett för utbildnings- eller informationssyften och innehåller inte – och ska inte heller anses innehålla – rådgivning och rekommendationer om finansiella frågor, investeringsskatt eller handel, dokumentation av våra handelskurser eller ett erbjudande om, eller en uppmaning till, en transaktion i finansiella instrument eller oönskade finansiella erbjudanden som är riktade till dig.
Tredjepartsinnehåll, liksom innehåll framtaget av XM såsom synpunkter, nyheter, forskningsrön, analyser, kurser, andra uppgifter eller länkar till tredjepartssajter som återfinns på denna webbplats, tillhandahålls i befintligt skick, som allmän marknadskommentar, och utgör ingen investeringsrådgivning. I den mån som något innehåll tolkas som investeringsforskning måste det noteras och accepteras att innehållet varken har varit avsett som oberoende investeringsforskning eller har utarbetats i enlighet med de rättsliga kraven för att främja ett sådant syfte, och därför är att betrakta som marknadskommunikation enligt tillämpliga lagar och föreskrifter. Se till så att du har läst och förstått vårt meddelande om icke-oberoende investeringsforskning och riskvarning om ovannämnda information, som finns här.
